34 Amendments of Sharon BOWLES related to 2007/2239(INI)
Amendment 1 #
Draft opinion
Paragraph -1 (new)
Paragraph -1 (new)
-1. Welcomes the findings of the studies on hedge funds, private equity and transparency commissioned by its Committee on Economic and Monetary Affairs;
Amendment 3 #
Draft opinion
Paragraph 1
Paragraph 1
1. Observes that a lack of due diligence by investors cannot be counteracted by more transparencyRecognises that improvements in transparency, in particular to promote greater comprehension and better visibility of risks has a valuable role to play, but notes that transparency is an aid to, not a replacement for, due diligence;
Amendment 8 #
Draft opinion
Paragraph 2
Paragraph 2
2. States that purposive transparency is a prime tool for managing risk: for the general public, openness about objectives is important, for investors it is the detail of the nature, valuation and risk of investments and for supervisors a full view of positions and strategi, strategies, risk management, market abuse controls and other compliance procedures, whilst observing thean appropriate level of confidentiality of that information; the effects of transparency can be negative, such as herding where investment strategies are revealed to competitors, and positive, including preventing the assumption of worse-than- actual scenarios;
Amendment 11 #
Motion for a resolution
Recital B
Recital B
B. whereas EU-based hedge funds and private equity funds require an environment which will respect their innovative strategies in order to enable them to remain internationally competitive while mitigating the effects of potential adverse market dynamics; is concerned that specific legislation would be inflexible and stifle innovation,
Amendment 11 #
Draft opinion
Paragraph 2 a (new)
Paragraph 2 a (new)
2a. Notes the experience of the United States where freedom of information legislation has been used by competitors to obtain fund investment details of a level intended for investors, which has compromised both the investors and the fund;
Amendment 14 #
Motion for a resolution
Recital C
Recital C
C. whereas in some Member States hedge funds and private equity funds are subject to national regulatory regimes and differing implementation of existing EU directives; whereas such divergent national rules give rise to the risk of regulatory fragmentation in the internal market, which may have the effect of impeding the cross-border development of this business in Europe,
Amendment 14 #
Draft opinion
Paragraph 3 a (new)
Paragraph 3 a (new)
3a. Nevertheless considers that investigation of possible reporting or clearing arrangements and statistical information gathering for OTC instruments should be undertaken at both EU and international level;
Amendment 15 #
Motion for a resolution
Recital D
Recital D
D. whereas directives seem to be the appropriathave already been used as the legal instruments with which to address the different issues related toissues of transparency, reporting and market manipulation and should be reviewed collectively for their impact on hedge funds and private equity funds,
Amendment 15 #
Draft opinion
Paragraph 3 b (new)
Paragraph 3 b (new)
3b. Warns against the implementation of contractual terms to impose risk limitations, which would amount to product regulation and interfere with financial innovation as well as investor choice;
Amendment 16 #
Draft opinion
Paragraph 3 c (new)
Paragraph 3 c (new)
3c. Underlines the necessity to overcome the fragmentation in the regulatory framework and hence the obstacles to cross-border distribution for alternative investments through the establishment of a European private placement regime;
Amendment 17 #
Draft opinion
Paragraph 3 d (new)
Paragraph 3 d (new)
3d. Underlines that industry-wide monitoring and reporting has a role to play in addressing public concerns and in order to understand the economic impact of private equity, and that there is already a requirement on private and public companies to consult their employees on matters that affect their interests; emphasises that an imbalance should not be created between commercial disclosures required of private equity portfolio companies and those required by other private companies;
Amendment 21 #
Motion for a resolution
Recital E
Recital E
E. whereas it is recognised that one of the main issues is the need foranalysis of transparency and where it can be enhanced; whereas transparency has several facets, such as the transparency of hedge funds vis-à-vis the companies whose shares they acquire or own, as well as vis-à-vis prime brokers, institutional investors such as pension funds or banks, retail investors, business partners, regulators and authorities; whereas one of the main transparency deficits lies in the relationshipa complaint made by some parties is of a transparency deficit between a hedge fund and the companies whose shares it acquires or owns,
Amendment 21 #
Draft opinion
Paragraph 4 a (new)
Paragraph 4 a (new)
4a. Believes that tested voluntary guidelines can evolve into more formal structures with less risk of unforeseen consequences; recognises that formal regulations are not as adaptable, and that codes of conduct are better at adapting to innovative changes; suggests that a one- stop-shop website for codes of conduct be established for the European Union and promoted internationally; suggests that that website should include a register of those who comply with the codes of conduct, their disclosures, and explanations of non-compliance; observes that reasons for non-compliance can also be a learning tool;
Amendment 24 #
Motion for a resolution
Recital F
Recital F
Amendment 24 #
Draft opinion
Paragraph 4 b (new)
Paragraph 4 b (new)
4b. Recognises that there is no uniform public disclosure of sovereign wealth funds (SWFs) and welcomes the initiative of the International Monetary Fund to establish a working group to draft an international code of conduct for SWFs; believes that such a code of conduct will go some way to demystifying SWF activities; calls on the Commission to take part in this process;
Amendment 25 #
Motion for a resolution
Recital F
Recital F
F. whereas the primary reason for the current sub-prime crisis is not the lack of regulation of investors but the failure of rating agencies; whereas the rating agencies should therefore be made subject in , nor can it be attributed to one single sector: among the various faults it is observed that the securitisation and rating agency process in the context of complex structured products resulted in overprinciple to the same compliance rules as those applying to auditorng of these products with respect to the underlying assets,
Amendment 25 #
Draft opinion
Paragraph 5
Paragraph 5
5. Recognises that EU onshore hedge funds, hedge fund managers and private equity firms are subject to existing legislation, notably concerning market abuse, and that indirect regulation applies to them through counterparties and when related investments in regulated products are sold; notes that share holdings are subject to the usual disclosure requirements; recalls, in particular, that the banks that finance hedge funds and private equity are themselves regulated under Community law as regards, inter alia, capital adequacy, conflicts of interest and systems and controls; observes also that the business relationship of banks with hedge funds and private equity houses affords them considerable influence to demand and receive as much information from their clients as they deem necessary to fulfil their role; notes that the linkage between hedge funds and their counterparties has been exhibited in enforced de-leveraging during the recent financial turmoil; notes that share holdings are subject to the usual disclosure requirements; recognises that investment managers have a fiduciary responsibility to investors and should exercise voting rights in the interest of such investors and in consideration of the investment mandate of the investment vehicle and that this may require so-called activism which may also be beneficial to the company; observes that institutions lending shares should have due regard to whether and how the shares might be used, including for voting;
Amendment 27 #
Draft opinion
Paragraph 5 a (new)
Paragraph 5 a (new)
5a. Is of the opinion that any investigation into the possibility of a system of EU-wide shareholder identification should include a cost-benefit analysis of additional reporting requirements with the aim of avoiding an overflow of information;
Amendment 30 #
Motion for a resolution
Recital G
Recital G
G. whereas Community legislation provides for mechanisms such as comitology or Lamfalussy procedures which allow for flexibility in reacting to the changing business environment via implementing measures; whereas this will improve with the instrument of delegated acts under the new Treaty; whereas it would, nevertheless, be wrong to ignore the harm and legal uncertainty that could be caused by introducing hasty, untested legislation simply because future amendment might be easier,
Amendment 30 #
Draft opinion
Paragraph 6
Paragraph 6
6. AsIn the context of private equity, obsertves that additional, especiallyintroduction of more frequent, reporting requirements can inducmight create pressure for short-term returns rather than long-term stability; in all contexts, believes that better linkage is needed between remuneration packages and long-term performance;
Amendment 31 #
Motion for a resolution
Recital H
Recital H
H. whereas numerous different businorganisations such as the International Organization of Securities Commissions, the International Monetary Fund, the Organisation for Economic Co- operation and Development and industry bodiess, initiatives have established their own codes of best practice which may serve as a model for EU legislation; whereas, in addition to complying with EU legislation, companies and business associations should be encouraged to establish their own codes of best practice, cluding those for hedge funds and private equity have already established principles and codes of best practice which need testing and monitoring; whereas, in addition to complying with EU legislation, companies and business associations should be encouraged to sign up to these codes on a 'comply or explain' principle and details of such compliance and explanations should be publicly available,
Amendment 33 #
Draft opinion
Paragraph 6 a (new)
Paragraph 6 a (new)
6a. Welcomes the proposal of the International Organization of Securities Commissions for the valuation of hedge fund portfolios and looks forward to its widespread introduction; notes that valuing illiquid assets is currently a work in progress;
Amendment 34 #
Draft opinion
Paragraph 6 b (new)
Paragraph 6 b (new)
6b. Recognises that neither hedge funds nor private equity are the cause of the current financial turmoil; supports the international consensus expressed by the Commission, Member States, the European Central Bank, the Financial Stability Forum, the International Organization of Securities Commissions and others that it will take time to understand the full causes and effects of the sub-prime turmoil and that a hasty legislative response would be a mistake; notes, however, that a lack of comprehension of complex products and ratings has been exposed and that measures to ensure better understanding, visibility of processes and notation for different types of risk, such as liquidity and complexity, as well as credit worthiness, should be developed as soon as possible;
Amendment 35 #
Draft opinion
Paragraph 6 c (new)
Paragraph 6 c (new)
6c. Considers that, regarding new products, innovation is important and must not be unduly hampered; states that prudent person principles, supervisory and investor diligence and risk visibility are more important than a registration system that could be misused, as were credit ratings;
Amendment 36 #
Draft opinion
Paragraph 6 d (new)
Paragraph 6 d (new)
6d. Notes that Member States have or can put in place measures to counter asset stripping, including the obligations of directors, and that there is no evidence that a Community measure would be more effective;
Amendment 37 #
Draft opinion
Paragraph 6 e (new)
Paragraph 6 e (new)
6e. Does not support the development of stand-alone legislation targeting hedge funds and private equity but believes that the Commission should investigate appropriate adjustments to existing regulation; believes any changes must be universal and should not unfairly discriminate; is a strong supporter of better regulation and believes that harmonisation should occur only when there is evidence of market failure;
Amendment 38 #
Motion for a resolution
Recital I a (new)
Recital I a (new)
Ia. whereas in the interests of better regulation legislation must only be used if there is evidence of market failure and should not discriminate between similar investment activities,
Amendment 41 #
Motion for a resolution
Paragraph 1
Paragraph 1
1. Requests the Commission also to submit to Parliament, oin the basis of Articles 44, 47(2) or 95its review of Directive 2004/109/EC ofn the EC Treaty, dependingharmonisation onf the subject matter, a legislative proposal or proposalsransparency requirements, an assessment of the functioning onf the transparency ofDirective as regards hedge funds and private equity funds; calls for such proposal(s) to be drawn up in the light of interinstitutional discussions and following the detailed recommendations belowinvestors, including relevant comparisons with its application to other investors;
Amendment 45 #
Motion for a resolution
Paragraph 1 a (new)
Paragraph 1 a (new)
1a. Suggests that a one-stop-shop website for codes of conduct should be established for the European Union and promoted internationally; suggests that this website should include a register of those market players who comply with the codes of conduct, their disclosures, and explanations of non-compliance; observes that reasons for non-compliance can also be a learning tool;
Amendment 48 #
Motion for a resolution
Annex
Annex
Amendment 50 #
Motion for a resolution
Annex – Introductory paragraph
Annex – Introductory paragraph
The European Parliament asks the Commission to propose a directive or directives guaranteeing a common standard of transparency and to tackle the issues mentioned below related to hedge funds and private equity funds, on the basis that the directive(s) should givencourage improvements in transparency by supporting and monitoring the evolution of self- regulation already introduced by managers of hedge funds and private equity funds and their counterparties, and to encourage Member States, w to support therse necessary, enough flexibility to transpose EU rules into their existing company-law systemsefforts through dialogue and exchange of best practice.
Amendment 52 #
Motion for a resolution
Annex – on hedge funds and private equity funds
Annex – on hedge funds and private equity funds
The European Parliament asks the Commission to submit the appropriate legislative proposals by way ofa review of the existing acquis communautaire affecting the various types of investors and counterparties, and to adapt or establish rules providing for the clear disclosure and timely communication of relevant and material information so as to facilitate high-quality decision-making and transparent communication between investors and the company management; The new legislation should require shareholders to notify issuers of the proportion of their voting rights resulting from an acquisition or disposal of shares where that proportion reaches, exceeds or falls below the specific thresholds starting with 3% instead of 5%, as mentioned in Directive 2004/109/EC; it should also oblige hedge funds and private equity funds to disclose and explain – vis-à-vistogether with its impact assessment and conclusion as to whether there are lacunae for which adjustment should be made; Believes that the cCompanies whose shares they acquire or own, retail and institutional investors, prime brokers and supervisors – their investment policy and associated risks; These proposals should be based onmission must not discriminate between asset classes and that any examination of the existing EU legislation, carried out with a view to ascertaining the extent to which the existing rules on transparency can be applied to the specific situation of hedge funds and private equity funds; With a view to the above-mentioned legislative proposals, the Commission should in particular: – explor and rules on transparency must be looked at as a whole and not be limited to the specific situation of hedge funds and private equity funds; Invites the Commission to explore ways to enhance the posvisibility of contract terms, to be applied to alternative investments, that provide for an unambiguous limitation of risk, for measures to be taken in the event of threand understanding of risk, as distinct from creditworthiness. Attention shoulds being exceeded, for adequate disclosure, for a clear description of lock-up periods, and for explicit conditions governing cancellation and termination of the contract; – investigate the issue of money la given as to whether existing directives and transparency measures are in effect underming in the context of hedge funds and private equity funded by 'legal spam' and excessive disclaimers in contracts;
Amendment 58 #
Motion for a resolution
Annex – on hedge funds specifically
Annex – on hedge funds specifically
The European Parliament asks the Commission to establish rules that enhance the transparency of voting policies of hedge funds, on the basis that the addressees of Community rules should be the managers of such funds; such rules could also include a system of EU-wide shareholder identification; With a view to the above-mentioned legislative proposal(s), the Commission should in particular: – investigate the possibility of mitigating the undesirable effects of securities lending; – examine whether reporting requirements should also apply to cooperation agreements between several shareholders and to indirect acquisitions of voting rights via option arrangements;
Amendment 63 #
Motion for a resolution
Annex – on private equity funds specifically
Annex – on private equity funds specifically
The European Parliament asks the Commission to establish rules that forbid private equity funds to “plunder” companies (so called “asset stripping”) and thus misuse their financial power in a way that merely disadvantages the company acquired, without having any positive impact on the company’s future and the situation of its employees, creditors and business partners; With a view to the above-mentioned legislative proposal(s), the Commission should examine ways of addressing the issues arising when banks lend huge amounts of money to private equity funds and then disclaim any responsibility whatsoever as to the purpose for which that money is used or the provenance of the money used to repay the loan.xamine whether the Member States have put in place measures counteracting asset stripping, including the appropriate obligations for directors, in order to see if there is any evidence that a Community measure would be more effective;