WEST PALM BEACH, FL (www.hedgeco.net) – The U.S. Treasury Secretary, John Snow has clearly stated the U.S government�s opposition to the proposals of German Chancellor Gerhard Schroeder to push forthe international regulation of hedge funds when G8 leaders meet next month in Scotland. Snow said, “It’s important we continue to monitor hedge funds …and make sure there aren’t any systemic risksbut I think it’s important we don’t over regulate.” He made his remarks in a press conference in Paris.
Other finance ministers also seem to be backing the U.S. position, French finance minister Thierry Breton said, “I share your view and I think we need to be careful not to over exaggerate the weight and importance of hedge funds.” A German government spokesman said earlier in the week, that hedge funds would “certainly be a subject” at the Group of Eight summit in Gleneagles, Scotland; however there seem to be little support coming from other finance ministers of the G8 nations.
Schroeder had also raised the issue of hedge funds with British Prime Minister Tony Blair when he visited Berlin, the German Chancellor has fallen out of favor with hedge funds following their recent involvement in the removal of the head of the German Stock Exchange. Schroeder will be raising the issue again when he meets with President Bush on June 27th. The U.S. position seem to be shifting from the hard-line positions taken by William Donaldson, the SEC Chief who has submitted his letter of resignation effective later this month.
Imposing regulations on hedge funds is a double-edged sword; for one thing many of the global hedge fund managers are based in offshore jurisdictions such as Cayman Islands and other low tax jurisdictions. Some experts believe that imposing more regulatory burden on hedge fund managers may force more of them to relocate to the offshore centers. Meanwhile the U.S. imposed hedge fund laws still remain unsettled in a U.S. federal court. It is unlikely that such issue will be resolved in time for the new laws to take effect early in 2006 as scheduled.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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