Charlie McCreevy, the European Union’s internal market commissioner, has dismissed calls for greater regulation of private equity and hedge funds, saying that both are “good for the market”.
In an interview with the Financial Times, McCreevy, who is responsible for pan-European legislation relating to financial services, said buyout firms and hedge funds had “given greater liquidity…. added shareholder value… and helped the rationalisation and innovation of companies.”
The commissioner said there was no need for further regulation, since the industry posed no threat to financial stability. He warned that any European legislation would simply result in firms moving their capital to different jurisdictions.
He also suggested that calls for greater disclosure reflected a desire in some European countries to avoid activist shareholders. Imposing more onerous reporting requirements on hedge funds, for example, would benefit nobody, he said: “Some people – when they talk about this – what they really want to do is regulate them out of existence. Why? Because in my view they don’t want shareholder activism.”
However, McCreevy was scathing about the industry’s public relations efforts. “If you were to pick an example of any group that has done a notoriously bad job at public relations, it is these two. And I am not sure whether they will be able to recover the lost ground,” he said.
McCreevy’s defence of the industry comes in the wake of renewed criticism from trade unions and politicians throughout Europe. In the UK, a number of candidates for the Labour Party deputy leadership have come out in support of the unions, as they look to bolster their support ahead of the forthcoming election.