The Managed Funds Association, the premier U.S. hedge fund lobbying group, is bankrolling a campaign by the Alternative Investment Management Association, which is based in London, to overturn parts of the European Commission’s draft directive on Alternative Investment Fund Managers. Officials at both organizations confirmed the financial contribution made by MFA members, but would not provide a figure. The MFA has raised a ton of money in recent years and has stepped up its lobbying efforts and the contribution to AIMA is understood to be substantial.
“The MFA has a long history of engagement in European regulatory matters and we’re happy to be working with AIMA on a coordinated industry response to the EU directive,” said Darcy Bradbury, chair of the MFA and director of external affairs at D.E. Shaw. “Given the broad reach of the directive’s proposals and our members’ significant investor base on the European continent, it makes sense to collaborate on matters concerning global financial regulation.”
The biggest sticking point for both organizations is a section of the directive concerning the marketing of alternative funds. In its current form, the directive makes a distinction between firms that have their headquarters in the European Union and those that don’t. An MFA official noted that a U.S. hedge fund with a London office would therefore be unable to run money for European Union investors, despite being authorized by the U.K.’s Financial Services Authority.
Likewise, investors based in the European Union would likely be prohibited from investing in managers outside the region, a scenario that worries many institutional investors. A letter joint-authored by 10 Dutch pension funds in January estimated that such a provision would cost them roughly €1.5 billion a year, since they would be forced to reallocate assets invested in non-European Union alternative investment funds into less appealing assets such as equities and bonds.
The MFA was keen to put its weight behind AIMA’s campaign. The MFA official noted that advocacy is a relatively new area for AIMA, which traditionally has been better-known as an educational organization. AIMA’s prominence on the ground in Europe is a benefit, but the two associations view the campaign as a joint venture, the MFA official added.
“We very much welcome the MFA's extremely significant involvement in the campaign, which has been absolutely invaluable,” said AIMA chief executive Andrew Baker. “In fact the campaign as a whole has been a great example of the global industry working together for the common good.”
—Robert Murray