Alts. Bonuses Unaffected By New EU Fund Rules

Feb 26 2014 | 11:54am ET

Alternative investments managers have again escaped tough new compensation rules in Europe.

The European Union and its member states have agreed to new bonus rules for mutual fund managers. But the limits will not apply to hedge funds or private equity firms, although both may face curbs in the future.

If so—and if the mutual fund rules are to be extended to them—alternative investment managers will at least face less draconian rules than those imposed on banks, which are barred from paying bonuses larger than an employee's annual salary. But the mutual fund rules still require a three-year deferral of at least 40% of bonuses, and that half of cash bonuses be invested in a manager's fund.

"We want to ensure that responsible remuneration policies are in place across the financial sector and that there are no loopholes for risky and dangerous trading practices," Arlene McCarthy, a member of the European Parliament from the U.K., said. "The new rules will bring funds in line with EU banker bonus rules, as there will be no guaranteed bonuses for fund managers and 40% of bonuses must be deferred."

A formal deal on mutual fund pay is expected within weeks, after which EU member states will have 18 months to implement the rules.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Viking Manager In Rent Dispute

Aug 11 2014 | 4:14am ET

A hedge fund manager is demanding most of his money back from his former landlord...

Guest Contributor

Majority Of Inflows Go To Brand Name Hedge Funds

Aug 12 2014 | 9:00am ET

Since the market correction of 2008, a vast majority of hedge fund net asset flows...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note