24 Amendments of Ieke van den BURG related to 2007/2239(INI)
Amendment 5 #
Draft opinion
Paragraph 1
Paragraph 1
1. Observes that a lack of due diligence by investors cannot be counteracted by more transparency alone; stresses that transparency contributes to a better understanding of complex financial products;
Amendment 6 #
Draft opinion
Paragraph 1 a (new)
Paragraph 1 a (new)
Amendment 9 #
Motion for a resolution
Recital A
Recital A
A. whereas it is recognised that alternative investment vehicles such as hedge funds and private equity funds can offer new diversification benefits for asset managers, increase market liquidity and the prospects of high returns for investors, and improve market efficiency; whereas it is also recognised that they take advantage to a large extent of asymmetry of information on financial markets and that the aggregated activities of hedge funds and private equity may create systemic risks and constraints for the real economy and international financial stability,
Amendment 10 #
Motion for a resolution
Recital B
Recital B
B. whereas EU-based hedge funds and private equity funds require an regulated 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,
Amendment 10 #
Draft opinion
Paragraph 2
Paragraph 2
2. States that purposive transparency is a prime tool for managing risk; stresses the need for a diversified level of transparency: 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 strategies, whilst observing the confidentiality of that information; thnegative effects of transparency can be negative, such as herding where investment strategies are revealed to competitors, should be avoided and positive effects, including preventing the assumption of worse-than- actual scenarios, promoted;
Amendment 12 #
Motion for a resolution
Recital B a (new)
Recital B a (new)
Ba. whereas hedge funds and private equity funds which have their management company domiciled in the EU have to comply with existing and future Community legislation; whereas non-EU-based entities also have to comply with this legislation in the context of certain activity,
Amendment 13 #
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; whereas such divergent national rules give rise to the risk of regulatory fragmentation and arbitrage in the internal market, which may have the effect of impeding the cross- border development of this business in Europe, and also, and more importantly, may cause a race to the bottom resulting in weakening of the regulatory and supervisory regime necessary to prevent companies, employees and the real economy from being negatively affected,
Amendment 13 #
Draft opinion
Paragraph 3
Paragraph 3
3. Considers that standardisation of over- the-counter (OTC) products is a contradiction in terms: an OTC clearing system is attractive in theory but would add to costs, so unless it is done on an international basis it could damagewould help to prevent systemic risks and an OTC clearing system would provide the transparency and oversight required for supervisors to assess such risks; considers that such a system, introduced on an international basis, would be preferable in order not to harm European competitiveness in a global market;
Amendment 18 #
Draft opinion
Paragraph 4
Paragraph 4
4. NotWelcomes thate public attention wathat is drawn to hedge funds and private equity following high-profile cases and activity in the context of well-known companies; recognises that both hedge funds and private equity are responding to criticism by way of self-regulatory proposals incorporating a 'comply or explain' principle; considers that those codes need to be allowed sufficient time to operate, spread globally and for their effects be analysedare a step forward but not sufficient to prevent the sector from taking undue risks, which possibly negatively influence the macro economics; urges the Commission to put forward targeted legislation;
Amendment 20 #
Motion for a resolution
Recital E
Recital E
E. whereas it is recognised that one of the main issues is the need for transparencythe current financial crisis has highlighted a lack of transparency and a need to enhance it at different levels is recognised; whereas transparency has several facets, such as the transparency of hedge funds and private equity 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 relationship between a hedge fund or private equity fund and the companies whose shares it acquires or owns,
Amendment 23 #
Motion for a resolution
Recital E a (new)
Recital E a (new)
Ea. whereas transparency is an essential condition for investor confidence and the understanding of complex financial products, and thus favours the optimum functioning and stability of the financial markets,
Amendment 26 #
Draft opinion
Paragraph 5
Paragraph 5
5. Recognises that EU onshore hedge funds, hedge fund managers and private equity firms are subject to pieces of 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;
Amendment 28 #
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 butlies in several elements such as the lack of regulation of American investment banks, the excesses of the originate-and-distribute model and the securitisation process, failure to comply with the due diligence process, the inadequate valuation of risks as well as the failure of rating agencies; whereas the rating agencies should therefore be made subject in principle to the same compliance rules as those applying to auditors,
Amendment 32 #
Draft opinion
Paragraph 6
Paragraph 6
6. Asserts that additional, especially frequent, reporting requirements can induce pressure for short-term returns rather than long-term stabilitymay be necessary to reveal information about strategies of hedge funds and private equity firms that are relevant for long-term stability, and urges the IASB to put forward assessments and proposals;
Amendment 33 #
Motion for a resolution
Recital H
Recital H
H. whereas numerous different business 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; whereas those codes should be accompanied by the 'comply or explain' principle and should be properly assessed in a transparent way,
Amendment 35 #
Motion for a resolution
Recital I
Recital I
I. whereas there seems to be no need for product-related legislationproduct-related legislation does not seem to be the appropriate type of regulation to deal with this innovative sector,
Amendment 37 #
Motion for a resolution
Recital I a (new)
Recital I a (new)
Ia. whereas securities lending with the purpose of voting on borrowed shares is a bad practice and shareholders with a long-term horizon are preferable to those with a short-term orientation,
Amendment 39 #
Motion for a resolution
Recital I b (new)
Recital I b (new)
Ib. whereas the current structure of corporate governance includes imbalances in terms of ownership, control, transparency, supervision, accountability and information; whereas hedge funds and private equity potentially affect the transparency of the operational management of companies in a negative way,
Amendment 40 #
Draft opinion
Paragraph 6 a (new)
Paragraph 6 a (new)
6a. Notes that securities lending with the purpose of voting on borrowed shares is a bad practice; stresses that a long-term prospect of shareholders is preferable to borrowed shares for the short term; urges the Commission to put forward legislation that requires intermediaries to enable shareholders to vote and ensure that their voting instructions are implemented, and to ensure that voting policies of identified shareholders are disclosed;
Amendment 54 #
Motion for a resolution
Annex – on hedge funds and private equity funds – subparagraph 1
Annex – on hedge funds and private equity funds – subparagraph 1
The European Parliament asks the Commission to submit the appropriate legislative proposals by way of 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, as well as between investors and other counterparties;
Amendment 56 #
Motion for a resolution
Annex – on hedge funds and private equity funds – subparagraph 4
Annex – on hedge funds and private equity funds – subparagraph 4
With a view to the above-mentioned legislative proposals, the Commission should in particular: – explore the possibility 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 thresholds 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 laundering in the context of hedge funds and private equity funds; – harmonise rules and recommendations for registering and identifying shareholders beyond a certain proportion, as well as for disclosure of their strategies and intentions; – propose rules and recommendations to prevent abuse of securities lending for the purpose of exercising voting rights linked to borrowed shares in shareholder meetings; – propose rules and recommendations to oblige intermediaries to enable the original shareholders to participate actively in voting at general meetings of shareholders and to make sure that their voting instructions are respected by proxy- holders, as well as to ensure that voting policies of identified shareholders are disclosed; – establish, together with the industry, a code of best practice on how to rebalance the current structure of corporate governance with a view to reinforcing long-term orientation and discouraging financial and other incentives for short- term excessive risk-taking and irresponsible behaviour;
Amendment 61 #
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; To this end, the Commission should introduce limitations on the withdrawal of liquid assets from the acquired company; the practise of dividends financed by an additional debt on the company's assets should be stopped, in particular; a common set of rules should be adopted to guarantee the capital maintenance of companies; In the same spirit, the Commission should establish provisions that foresee full transparency of managers' remuneration systems, including stock options, through formal approval by the general meeting of the company's shareholders;
Amendment 65 #
Motion for a resolution
Annex – on private equity funds specifically – subparagraph 2
Annex – on private equity funds specifically – subparagraph 2
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; the Commission should also examine ways to set an upper limit to the total leverage linked to a single buy-out with a view to the viability of the company.
Amendment 67 #
Motion for a resolution
Annex – on private equity funds specifically – subparagraph 2 a (new)
Annex – on private equity funds specifically – subparagraph 2 a (new)
The European Parliament asks the Commission to review the Transfers of Undertakings Directive 77/187/EC in order to extend its application to transfers of shares, as is the case with leveraged buyouts; this would concern, in particular, the provisions dedicated to employees' rights in terms of disclosure, consultation and protection.