In a bid to force private equity groups and hedge funds to disclose an unprecedented amount of information European MEPs are meeting in Brussels to enforce further disclosure.
The call for transparency follows a similar demand from Unite, the UK’s largest trade union that insisted that hedge funds should have to prove that their investments are not contributing to the economic turbulence.
The motion is expected to be approved and will lead to further problems for the private equity sector as it struggles through the credit crunch.
If successful, rules would be created that would require investors to disclose how investments are financed and information on ownership structures. Hedge funds would have to be registered and disclosure on the remuneration of private equity and hedge fund executives plus employee rights and consultation over change in ownership of companies.
Internal Market commissioner Charliee McCreevy said in the EU parliament: “We should not make the mistake of perceiving all activities of hedge funds as a threat to the market but we should also be aware of the positive effects that their activities have. Let me be clear that the EU economy is going to need massive investment in the time ahead. Without SWFs, private equity and the like, Europe’s recovery from today’s turmoil will be all the slower.”
Denmark’s Socialist MEP Poul Nyrup Rasmussen is the author of the report and is leading the call for more transparency.