Tax On Bonuses Among Proposed Amendments To EU Hedge Fund Bill

Feb 1 2010 | 1:08pm ET

Among the 1,000 proposed amendments to the European Union hedge fund regulation bill are measures that would curb its impact and tax fund manager bonuses.

Under the former, only hedge funds and private equity funds with more than €1 billion in assets under management would be covered by the proposed directive, which could impose strict new reporting and custody requirements, as well as possible leverage limits.

The directive as written by the European Commission is “poorly drafted,” the amendment’s sponsor, European Parliament member Syed Kamall, told Bloomberg News.

Kamall, a Conservative who represents London, argued that the regulations “should take account of the size of funds and not impose costs on small funds with no systemic importance which might force them to close.”

Another proposed amendment would take no heed whatever of that admonition. Luxembourg’s Robert Goebbels and Germany’s Udo Bullmann, members of the left-leaning Progressive Alliance of Socialists and Democrats, want heavy taxes imposed on bonuses if fund managers don’t adequately punish themselves for risk taking.

The amendment would place taxes of “more than 20%” on those fund managers that don’t take into account the risks inherent in their investments when they set their bonus policy.

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