Greek Leader Blasts ‘Speculation,’ Calls For Strict Hedge Fund Regulation

Mar 10 2010 | 1:04pm ET

Despite the findings of German regulators that there is no evidence that hedge funds used credit default swaps to push his country to the brink of default, Greek Prime Minister George Papandreou is demanding that hedge funds be more strictly regulated.

In Washington, D.C., for meetings with President Barack Obama and Secretary of State Hillary Clinton, Papandreou said the “speculators” were partly to blame for Greece’s problems, notwithstanding the findings of Germany’s BaFin. He called for tighter strictures on market speculation and singled out hedge funds as particularly in need of stronger regulation.

Papandreou’s words come as the European Union moves forward with its controversial hedge fund regulation proposal. The U.K. is mounting a last-ditch effort to weaken the Alternative Investment Fund Managers directive, which would impose strict new reporting and custody requirements on hedge funds and private equity funds, as well as possible leverage limits. The new rules could also bar most—if not all—foreign hedge funds from marketing their wares within the 27-member bloc.

Last week, Greece barred hedge funds from participating in a debt sale in retaliation for their perceived responsibility for the country’s problems.

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