Germany To Limit Hedge Funds To 'Professionals'

Jul 25 2012 | 11:09am ET

Germany has never been shy about its dislike of hedge funds; the country has consistently pressed for their strict regulation and former Vice Chancellor Franz Müntefering famously referred to them as "swarms of locusts." So it is no surprise that the country has introduced tough a new law to bring hedge funds to heel within its borders.

The new bill, introduced today by Finance Minister Wolfgang Schäuble, would bar all but professional investors from directly investing in hedge funds. All others would have to settle for funds of hedge funds—and even those would have to carry a warning from the finance minister that "this investment fund invests in hedge funds, which are not subject to any legal limitations on leverage or risk."

"The stated aim of this law is to provide protection to private investors against especially risky investments," Johannes Blankenheim, a spokesman for Germany's Finance Ministry, said.

Germany's cabinet is expected to take up the measure after the summer. In addition to the tough new limits on who can invest, the law will also bring Germany into line with the European Union's new rules on alternative investments, which come into force next year.

Unsurprisingly, the German hedge fund industry isn't happy. Frank Dornseifer of the Bundersverband Alternative Investments called Schäuble's proposals "contradictory," the Berliner Zeitung reports.


In Depth

Steinbrugge: Will Hedge Funds Help or Hurt During the Next Market Correction?

Sep 7 2016 | 11:55pm ET

Most investors have become accustomed to quick rebounds when markets correct, but...

Lifestyle

Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...