FSA Official Blasts Private Equity ‘Arrogance’

Feb 18 2010 | 3:01am ET

The private equity industry got a dressing-down from one of its chief defenders against potentially draconian regulation being discussed by the European Union.

Dan Waters, head of the U.K. Financial Services Authority’s asset management division, blasted the “arrogance” of p.e. firms, blaming them for the regulatory straits in which they find themselves. Waters is among the British regulators in the forefront of the battle to blunt the more far-reaching aspects of the proposed European Union alternative investment managers directive, which would apply to both hedge funds and private equity funds.

The proposed rules would impose strict new reporting and custody requirements, as well as possible leverage limits. But Waters warned that buyout firms were doing themselves no good when they open their mouths.

At a Berlin conference last week, Alchemy Partners’ Jon Moulton asked a panel of regulators and p.e. executives, including Waters, why the p.e. industry should be subjected to new European regulations. He also lamented the “clinically insane” amount of regulation he says the industry already faces in the U.K.

This was too much for Waters.

“It is the arrogance of that statement, that no regulation is needed, that has got the industry in trouble in the first place,” he offered. “We are where we are; we must deal with it.”

Waters has previously reserved such strong language for the legislation—currently working its way through the European Parliament—that both he and Moulton oppose. Last week, he blasted the proposed rules, arguing that they “could go badly wrong.”


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