Timothy Spangler, who heads Kaye Scholer LLP's investment funds group, writes for The Deal about the differing strategies to hedge fund and private equity regulation U.S. and British regulators are taking given their emergence on the forefront in 2007.
Continue reading below
The U.K. response to these concerns was, in the end, unsurprising. As they have done previously, the British steered away from further legislation, further rule making and further requirements imposed on firms. Instead, they facilitated the establishment of two separate working groups lead by leading figures: David Walker, in the case of PE funds, and Andrew Large, in the case of hedge funds.
On the PE side, the group issued its recommended guidelines in November. Spangler noted that:
- "the guidelines operate on a "comply or explain" basis, whereby PE firms would either need to fulfil the requirements or disclose their lack of compliance and the reasons therefore;"
- "the guidelines do not apply to sovereign wealth funds or individual buyers who may operate in a "private equity like" manner;" and
- "issues concerning the taxation of PE funds and the professionals who manage them was not included in the working group's remit."
On the hedge fund front, the standards also operate on a "comply or explain" basis. So, can it work in the U.S.?
Stateside, he noted, "an 'outsorced' approach to driving up standards and reinforcing best practice in these areas, done in a public and open way that ultimately empowers investors and counterparties to better protect their own rights, may prove to be a better way forward for PE funds and hedge funds in the U.S."
See full story from TheDeal.com
