The Regulation of Hedge Funds and Private Equity: A Case Study in the Development of the EU’s Regulatory Response to the Financial Crisis

The Regulation of Hedge Funds and Private Equity: A Case Study in the Development of the EU’s Regulatory Response to the Financial Crisis

Eilis Ferran

Series number :

Serial Number: 
176/2011

Date posted :

February 01 2011

Last revised :

March 01 2011
SSRN Share

Keywords

  • Hedge Funds • 
  • private equity • 
  • Alternative Investment Fund Managers Directive • 
  • financial crisis • 
  • reform • 
  • European Union

This article examines the recent development of EU regulatory policy with respect to the alternative investment industry up to and including the adoption of a major new Directive. This Directive is just one part of a much larger package of new EU measures relating to the financial markets but its emergence merits being singled out for three reasons.

First, the account of how it came about and what it sets out to do touches upon two overarching concerns that are frequently expressed about laws that are made in the immediate aftermath of a crisis: opportunistic use of crisis situations to achieve unrelated goals, and crisis-induced regulatory over-reaction. Second, with the regulation of alternative investments being addressed internationally as well as in Europe, close examination of this area provides revealing glimpses of ways in which key players in the EU policy formation process have simultaneously used the financial crisis to exert influence internationally and used international developments to further an internal agenda. Finally, out of the exceptional level of controversy that surrounded the legislative process for the Directive come some important insights on relations between the EU Institutions and, in particular, on the European Parliament’s increasing deftness in putting its mark on EU financial market regulation.

Published in

Published in: 
Publication Title: 
University of Cambridge Faculty of Law Research
Description: 
Paper No. 10/2011

Authors

Real name: 
Fellow, Research Member
University of Cambridge Law Faculty and Centre for Corporate and Commercial Law (3CL)