49 Amendments of Sharon BOWLES related to 2007/2238(INI)
Amendment 5 #
Draft opinion
Recital C a (new)
Recital C a (new)
Ca. whereas hedge funds and private equity should neither be treated differently from other private investments nor be subject to specific legislation unfairly affecting their competitiveness,
Amendment 10 #
Motion for a resolution
Recital A
Recital A
A. whereas there is at present insufficientno specific EU regulation of hedge funds and private equity, many EU and national regulations cover aspects of their activities,
Amendment 11 #
Draft opinion
Paragraph 1
Paragraph 1
1. Notes that there is a body of Community legislation concerning financial markets that directly or indirectly applies to hedge funds and private equity; emphasises that most of that legislation is relatively recent and that its full impact cannot therefore be assessed yet; consequently, calls on the Member States and the Commission to ensure its consistent implementation and application; emphasises that an imbalance should not be created between commercial disclosures required from private equity portfolio companies and those required from other companies; asserts that all further adjustments to existing legislation must be the subject of a proper cost/benefit analysis and must be non- discriminatory;
Amendment 12 #
Draft opinion
Paragraph 2
Paragraph 2
2. Notes that, in addition to existing legislation, the hedge fund and private equity industries have produced their own voluntary standards of best practice; supports these initiatives and takes the view that such a soft-law approach is appropriate for the regulation of the two sectors because industry-initiated standards can keep up with market developments better than heavy regulation and are more likely than Community legislation to impose a certain degree of global control, particularly over market players domiciled off-shore; believes that any excessive regulation will have a detrimental effect resulting in more hedge fund managers and private equity moving off-shore, which in turn will result in less transparency and oversight;
Amendment 13 #
Motion for a resolution
Recital C
Recital C
C. whereas the Commission has not responded positively to Parliament's earlier requests, including those made in itsall aspects of above-mentioned resolutions of 15 January 2004, 27 April 2006, 11 July 2007, 13 December 2007),
Amendment 15 #
Draft opinion
Paragraph 2 a (new)
Paragraph 2 a (new)
2a. Acknowledges the positive role played by private equity in supporting new venture companies and adding financial and managerial value and experience to failing companies; notes that any "asset- stripping" is the exception and not the norm; notes that Member States have or can put in place measures to counter instances of asset-stripping, and that portfolio company directors also have fiduciary obligations to their company as well as obligations to consult with employees, as in the case of other companies;
Amendment 19 #
Motion for a resolution
Recital E
Recital E
E. whereas several global, EU and national institutions have, long before the current financial crisis, voiced their concerns in relation to hedge funds and private equity about financial stability, inadequate risk management, excessive debt (leverage) taken steps and made recommendations in relation to:- on the one hand financial institutions' exposure to hedge funds and the framing of these exposures in institutions' overall risk management, and on the other hand the valuation of illiquid and complex financial instruments, by all financial managers,
Amendment 19 #
Draft opinion
Paragraph 4
Paragraph 4
4. Calls on the Commission to study the possibility of requiring hedge fund and private equity industries' bodies to notify the Committee of European Securities Regulators of best practice standards as well as any substantive changes made thereto; considers that a database thus established could serve as a point of reference for investors; acknowledges the work being conducted on voluntary codes and principles at a global level, such as the International Organization of Securities Commissions' Principles for the Valuation of Hedge Fund Portfolios, and believes that, ultimately, any response should as far as possible be sought at a global level;
Amendment 25 #
Motion for a resolution
Recital F
Recital F
F. whereas there is empirical evidence thatsome hedge funds may engage in herding in times of market turmoil, thus giving rise toin the EU this is largely due to counterparty pressure for deleveraging and it is also evident that the varying hedge fund strategies mean they can help mitigate financial instability concerns,
Amendment 36 #
Motion for a resolution
Recital I
Recital I
I. whereas hedge funds and private equity in many cases provide liquidity and demand for, help correct market inefficiencies, and foster diversification and the creation of new, innovative products,
Amendment 40 #
Motion for a resolution
Recital J
Recital J
J. whereas financial stability also requires better supervisory cooperation, including globally, which logically requires, in due course, a comprehensive revision of currentcontinuing improvements in EU supervisory arrangements,
Amendment 41 #
Motion for a resolution
Recital K
Recital K
K. whereas enhanced appropriate levels of transparency towards the public, investors and supervisory authorities, including, in future, any new EU supervisory body, are crucial to ensure such well-functioning and stable financial markets as well as for promoting competition between market actors and products,
Amendment 55 #
Motion for a resolution
Recital L
Recital L
L. whereas excessive debt required by much of the activities of hedge funds and private equity threatens financial stability, prejudices the realisation of the long-term investment, growth and jobs agenda and is, moreover, unfairly favoured in national tax regimethe effects of high leverage may, in adverse market conditions, be dangerous; hence hedge funds and private equity fund managers should carefully assess their risks,
Amendment 60 #
Motion for a resolution
Recital M
Recital M
M. whereas the recent increase in private equity transactions has significantly increased the number of employees, whose jobs are ultimately controlled by equity funds, and are covered by Community employment law (in particular, Directive 2001/23/EC) was formulated when this was not sohich applies on a non discriminatory basis,
Amendment 65 #
Motion for a resolution
Recital N
Recital N
N. whereas in the eventminority instances of extreme debt loads, private equity leveraged buy-outs affect the viability of the target companies,
Amendment 72 #
Motion for a resolution
Recital O
Recital O
O. whereas, as with other entities, there are mcany be conflicts of interest either arising from the business model ofrelationships between private equity orand hedge funds or from the relationships between those vehicles and other actors in financial markets,and other actors in financial markets, however, reiterates that while welcoming realistic efforts to enhance existing EU legislation, such efforts must not be restricted solely to hedge funds and private equity;
Amendment 81 #
Motion for a resolution
Recital P
Recital P
P. whereas whilst there is no evidence that those vehicles caused the current financial crisis, they have been involved indge funds were amongst the businvess of non-regulated and highly complex structured products; whereas not being adequately capitalised and thus volatile to turbulences, those vehicles enhancetors in the complex structured products that were subject to the credit crisis, and thus incurred losses as did othe crisir investors,
Amendment 84 #
Motion for a resolution
Recital Q
Recital Q
Q. whereas in order to minimise the risk of future financial crises and given the strong interactions across markets and between market participants and given the objective of a level playing field across borders and between regulated and unregulated market participants, the EU needs better, more coherent and harmonised regulation across the boardshould continue to review the accuracy and coherence of its regulatory standards, taking into account developments at international level,
Amendment 89 #
Motion for a resolution
Recital Q a (new)
Recital Q a (new)
Qa. whereas the European Parliament welcomes the current work by the European Commission to establish a European Private Placement Regime in order to eliminate obstacles to cross- border distribution for alternative investments,
Amendment 99 #
Motion for a resolution
Recital Q a (new)
Recital Q a (new)
Qa. whereas there are already market led responses to the recent turmoil, for example among credit rating agencies, that can provide solutions more efficiently than regulation,
Amendment 102 #
Motion for a resolution
Paragraph 1
Paragraph 1
Amendment 106 #
Motion for a resolution
Paragraph 1
Paragraph 1
1. Requests the Commission to submit to Parliament by 30 November 2008, on the basis of Article 44, Article 47(2), or Article 95 of the EC Treaty, options for a legislative proposal or proposals oninclusive of hedge funds, private equity and other relevant actors, following the detailedtaking account of the recommendations below;
Amendment 112 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Considers that the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations for (i) the establishment of any EU supervisory authority, (ii) the EU public credit rating agency, and (iii) the EU public certification body for structured productrequested proposal(s) has/have no financial implications;
Amendment 114 #
Motion for a resolution
Annex
Annex
Amendment 115 #
Motion for a resolution
Annex – Heading
Annex – Heading
ANNEX TO THE MOTION FOR A RESOLUTION: DETAILED RECOMMENDATIONS ON THE CONTENT OF THE PROPOSAL REQUESTED
Amendment 119 #
The European Parliament considers that the legislative act to be adopted should aim to regulatealls on the Commission to consider the following regulatory and legislative options:
Amendment 120 #
Motion for a resolution
Annex – recommendation 1 – point a
Annex – recommendation 1 – point a
Amendment 121 #
Motion for a resolution
Annex – recommendation 1 – point a
Annex – recommendation 1 – point a
(a) Capital requirements Investment firms, insurance companies, credit institutions, conventional funds (such as UCITS and pension funds/IORPs) have to comply with capital requirements. Whatever the legal structure of hedge fund and private equity vehicles, including limited partnerships, tThe Commission should ensure that an appropriate capital requirement is introduced at the level of the entity that controls the investment of the fund or funds concerned (i.e. management firm), covering all funds regardless of their place of registrations continue to be risk based, not entity based. Consideration as to the adherence of codes of conduct may be taken into account by supervisors.
Amendment 131 #
Motion for a resolution
Annex – recommendation 1 – point b
Annex – recommendation 1 – point b
(b) EU public cCredit rating agencyies The Commission should establish an EU Public Credit Rating Agencytake necessary measures in order to foster competition and improve transparency in that sector. The Commission should also, in its revision of the Directive 2006/48/EC, introduce a provision that, where a credit assessment of an External Credit Assessment Institution (ECAI) is required for the calculation of a credit institution's risk- weighted exposure, the credit assessment of the EU Public Credit Rating Agency will also be required and continue its work with the competent international bodies.
Amendment 134 #
Motion for a resolution
Annex – recommendation 1 – point c
Annex – recommendation 1 – point c
(c) Liquidity The Commission should introduce risk-weighted capital adequacy requirements in respect of liquidity risk in its revision of the Directive 2006/48/ECcontinue its work with the competent international bodies with a view to setting internationally applicable principles for the management of liquidity.
Amendment 138 #
Motion for a resolution
Annex – recommendation 1 – point d
Annex – recommendation 1 – point d
(d) Valuation The Commission should propose precise rulcontinue its work with the competent international bodies with regard to resolving the difficulties oin the valuation of illiquid financial instruments in order better to protect investors and the stability of financial markets.
Amendment 141 #
Motion for a resolution
Annex – recommendation 1 – point e
Annex – recommendation 1 – point e
Amendment 146 #
Motion for a resolution
Annex – recommendation 1 – point g
Annex – recommendation 1 – point g
Amendment 150 #
Motion for a resolution
Annex – recommendation 1 – point g
Annex – recommendation 1 – point g
(g) EU supervisory authorityies The Commission should establish a Europeanreview the adequacy and capacity of European Supervisory structures in the ongoing debate on the future of supervisorion covering all financial services sectors: capital markets, securities, insurance and banking sectors. It should further be established whether there should be two such European supervisors: onea radical overhaul of the current supervisory architecture or simple adjustments to the existing Lamfalussy structure and to what extent approaches must differ for prudential regulation and another for conduct of business regulation.
Amendment 155 #
Motion for a resolution
Annex – recommendation 2 – paragraph 1
Annex – recommendation 2 – paragraph 1
The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Amendment 156 #
Motion for a resolution
Annex – recommendation 2 – point a
Annex – recommendation 2 – point a
Amendment 161 #
Motion for a resolution
Annex – recommendation 2 – point b
Annex – recommendation 2 – point b
Amendment 169 #
Motion for a resolution
Annex – recommendation 2 – point c
Annex – recommendation 2 – point c
(c)Database The Commission should, with the help of Level 3 Committees, establish an EU-wide registration/authorisation database recording the informSuggests that a one-stop-shop website for codes of conduct be established, including a register of those who comply, their disclosure and explanations on both management firms and investment vehicles as specified above. The supervisory authorities of all Member States should have unlimited access. Relevant categories of the database should be publicf non-compliance; observes that reasons for non-compliance can also be a learning tool; this should be done for the EU and promoted internationally.
Amendment 174 #
Motion for a resolution
Annex – recommendation 2 – point d
Annex – recommendation 2 – point d
(d) Investors The Commission and supervisory authorities should ensure that investors in those vehicles receive not only sufficient but alsoand relevant and comparable information (e.g. the simplified prospectus/fact sheet for UCITS)information.
Amendment 178 #
Motion for a resolution
Annex – recommendation 2 – point e
Annex – recommendation 2 – point e
(e) Private equity and protection of employees The Commission should propose amendments toevaluate and if necessary amend Directive 2001/23/EC so that the same protections afforded employees by that Directive, including the right to be informed and consulted, apply whenever control of the undertaking or business concerned is transferred by means of a private equity transaction.
Amendment 185 #
Motion for a resolution
Annex – recommendation 3 – paragraph 1
Annex – recommendation 3 – paragraph 1
The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Amendment 186 #
Motion for a resolution
Annex – recommendation 3 – point a
Annex – recommendation 3 – point a
Amendment 187 #
Motion for a resolution
Annex – recommendation 3 – point a
Annex – recommendation 3 – point a
(a) Limits on leverage for private equity The Commission should amend, while reviewing Directive 77/91/EEC on capital to introduce rules to specify the appropriate level of debt at any given time in relation to the target company bearing in mind the legitimate rights of important stakeholders (including employees); in conjunction with such level, the Commission should request the Member States to introduce taxation consequences for private equity funds in cases of excessive debt; such taxation consequences could include eliminating or reducing the tax deductibility of interest payments on the debt concerned in line with best practices in Member St, ensure any amendments adhere to the fundamental principles based approach, so that capital is held according to risk, and does not unfairly discriminate against specific private investors or between different investment funds or vehicles that use similar stratesgy.
Amendment 189 #
Motion for a resolution
Annex – recommendation 3 – point b
Annex – recommendation 3 – point b
(b) Capital depletion The European Commission should amend Directive 77/91/EEC on capital to set minimum capital levels for the target company by reference to the long-term interests of the target company. The Commission should also, without delay, propose rules to harmonise requirements for directors of the target company (i.e. management and supervisory board members),review use of existing national legislative options to avoid asset stripping in target companies in order to ascertify that capital outflow (including any fees paid) is in the best long-term interests of the target company, including its long- term growth and R&D needs. In particular, EU corporate governance requirements, such as the provisions of the Directive 1978/660/EEC, might be amended to achieve that resultain whether there is a need for a harmonised measure.
Amendment 192 #
Motion for a resolution
Annex – recommendation 3 – point c
Annex – recommendation 3 – point c
Amendment 197 #
Motion for a resolution
Annex – recommendation 3 – point d
Annex – recommendation 3 – point d
Amendment 203 #
Motion for a resolution
Annex – recommendation 4 – paragraph 1
Annex – recommendation 4 – paragraph 1
The European Parliament considers that the legislative act to be adopted should aim to regulate:alls on the Commission to consider the following regulatory and legislative options
Amendment 204 #
Motion for a resolution
Annex – recommendation 4 – point a
Annex – recommendation 4 – point a
Amendment 206 #
Motion for a resolution
Annex – recommendation 4 – point b
Annex – recommendation 4 – point b
(b) The Commission should also introduce rulevestigate means to ensurhance effective Chinese walls between services that investment firms provide for their clients (such as prime brokerage) and all their other business units (including asset management services, proprietary trading etc). - Private equity The Commission should formulate rules by which to deal with the conflicts of interest between the private equity partners and the management of the target company (and any others who stand to gain from the deal). Those rules should include a requirement of public disclosure of any fees or other incentives received by directors (i.e. management board and supervisory board members) or employees of the target company. - Credit Rating Agencies (CRAs) The Commission should formulate rules by which to deal with the conflicts of interest inherent in their current business models, and arising from the interplay among actors in today's financial markets. - Market access and concentration: the Directorate General for Competition of the Commission should launch an inquiry into market concentration in the following financial services industry sectors: hedge funds, private equity, investment banks (with focus on prime brokerage services) and CRAsThe European Parliament wishes to reiterate that any adjustments should be applicable to all financial institutions and thus non-discriminatory.