Hedge funds Fret over Possible Caps on Bonuses in EU Rules

April 11, 2013   Jan Alexander

The European Union’s Alternative Investment Fund Managers Directive lacks clarity, say hedge fund groups

   Stuart Kaswell, general counsel to the Managed Funds Association
Is the European Union about to limit hedge fund managers’ compensation?

Maybe yes, maybe no. But hedge fund managers are clearly worried. The EU has issued a mandate, known as Alternative Investment Fund Managers Directive, providing a set of guidelines relating to risk and liquidity management, transparency, reporting and more. The guidelines will affect alternative investment funds and how they market their products to EU investors. But the AIFMD has left many questions unanswered — including the issue of compensation limits. The directive is due to take effect starting this July, although funds domiciled outside the EU will have until 2015 or possibly later to comply.

As of now it isn’t even fully certain which hedge funds will be subject to the directive. For instance, the EU authorities have not specified whether a U.S. office of a London-based hedge...


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