The European Parliament adopted, by a vote of 562 to 86 on September 23, the report prepared by the Party of European Socialists (PES) on legislative regulation of private equity and hedge funds. Though heavily amended in the final form which was approved by the European Parliament, the report's proposals for legislation address a number of key labour movement concerns. These include: limitations on debt levels in leveraged buyouts; measures to contain asset stripping of portfolio companies by private equity owners; greater transparency and disclosure rules for private equity with far greater scope than the voluntary "Codes of Conduct" which have been promoted as alternatives to regulation; greater capital adequacy requirements for financial instruments and institutions (including private equity and hedge funds), limitations on the easy securitization of leveraged loans ("originate and distribute") which have fuelled both the buyout boom and the financial crisis generally; and ensuring that employees in private equity-owned companies exercise the same rights to information as other EU private-sector employees.
"It is the first time that the European Parliament has ever demanded regulation of private equity and hedge funds," stated PES President Poul Nyrup Rasmussen. "Commissioner Charlie McCreevy has got to respond, and respond positively. With millions of families worried about their savings and pensions it would be very unwise to remind us that until very recently he believed that self-regulation was best. The financial crisis has forced the conservatives in the European Parliament to accept sensible reform, now it is the turn of the European Commission to prove that they no longer believe that the market alone knows best.”
The report is available on the website of the European Parliament here.
The IUF secretariat has now published a A Workers' Guide to Private Equity, a 36 page A5 brochure, aimed at IUF affiliates and trade unions and their members around the world. It is available in English, French, German, Spanish and Swedish.