The U.S. Treasury Secretary Timothy Geithner warns the European Commission not to regulate hedge funds and private equity funds. In a letter he sent to the EU Commissioner for the Internal Market, Michel Barnier, Geithner criticizes the proposed Directive which introduces tougher restrictions on investment funds.
“These new rules could harm U.S. hedge funds, private equity funds and banks and their ability to work in Europe. It could lead to conflicts between the U.S. and EU.”
In a letter he sent to the EU Commissioner for the Internal Market, Michel Barnier, Geithner criticizes the proposed Directive which introduces more stringent restrictions on investment funds, the Financial Times reports.
“These new rules could harm U.S. hedge funds, private equity funds and banks and their ability to work in Europe,” he writes in the letter dated March 1th.
“It could lead to conflicts between the U.S. and EU,” he warns.
The changes, as proposed, would restrict European investors access to invest in funds outside the EU, and funds from other places would have to deal with new rules to operate within the EU.
According to the directive, EU-based funds would also be required to use local banks for parts of its business.
Other areas that can lead to conflicts are the rules on bonuses and fees, loan restrictions and the abandonment of sensitive information.
EU diplomats will meet Thursday to discuss the new proposal.
Inside the E.U. there’s also skepticism towards the new regulations, particularly in Britain because the directive could threaten London’s position as a financial center.
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