Regulation

Sen. Charles Schumer is threatening to block European alternative investment funds from marketing or raising money in the U.S. if the European Union adopts new regulations that have a similar effect on American funds in Europe.

If proponents of the European Union’s proposed hedge fund regulations hope a change in government in London will smooth the path, they are likely to be disappointed.

Direct taxes would be a bad idea in the Cayman Islands, domicile of approximately 80% of the world’s hedge funds, a blue-ribbon panel has said.

The U.K. really is “very isolated” in its opposition to the European Union’s proposed hedge fund rules: The country counts only a pair of Mediterranean island nations in trying to sink the directive, which would impose strict reporting and custody requirements on hedge funds and private equity funds.

The European Parliament will not be deterred by the British-backed delay in approving European Union hedge fund legislation, a top lawmaker said.

Germany may deploy its spies to gather information about hedge funds and other currency speculators, its finance minister said.

A combative Angela Merkel blasted British Prime Minister Gordon Brown over the latter’s refusal to accept the European Union’s proposed alternative investments rules.

Spain, which holds the rotating presidency of the European Union, postponed a vote of the Union’s finance ministers on the directive, which would impose strict new reporting and custody requirements on hedge funds and private equity firms, and could freeze out foreign hedge funds. 

The head of the U.S. Senate’s Banking Committee will unveil a new comprehensive financial regulation reform bill today, one that does not include the controversial Volcker Rule.

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.