Socialists demand EU regulations on private equity

Three eminent socialists have again written to European Union Commission President José Manuel Barroso, demanding clarity on the terms of the commission’s commitment “to ensure appropriate regulation for private equity”. This is the third in a recent spate of open letters between the socialist group and Barroso.

The latest missive is a protracted response to remarks made by European Union Commissioner Charlie McCreevy in early December, and came from Poul Nyrup Rasmussen, president of the Party of European Socialists (PES); Martin Schulz, president of the PES Group in the European Parliament; and Pervenche Berès, chairwoman of the European Parliament’s Economic and Monetary Affairs Committee.

McCreevy’s remarks, which were made in a speech before the British Association of Venture Capitalists, dismissed blanket regulations for private equity, preferring self-regulation. He said, “We must not shackle the private equity industry with regulatory constraints that are neither necessary nor productive. Otherwise, we will deprive capital-starved industries of much needed equity capital.”

Rasmussen, Schulz and Berès expressed concern in the most recent public letter that an early response to

José Manuel Barroso

the group from Barroso, which said “no financial player should be exempt from regulation and oversight”, is at odds with McCreevy’s faith in industry codes for self-regulation. “We do not understand how McCreevy’s faith in voluntary codes of conduct for private equity is compatible with the assurances we received from you,” they wrote.

The trio wrote that McCreevy’s commitment to report back to the European Parliament on industry codes for self-regulation “is not enough”, and they called for urgent action. They concluded the letter by writing, “We expect to have proposals [for regulations] in time for the next European Council of 19th and 20th March and for Parliament to begin its deliberations before the 2009 European elections”.