Regulation

The European Union’s internal markets chief is asking his political patron to compromise in a bid to push through controversial hedge fund regulations.

The U.S. Senate is considering the so-called “carried interest” loophole, which taxes performance fees earned by alternative investment managers as capital gains rather than ordinary interest.

The European Union’s proposed hedge fund rules will not exclude U.S. hedge funds from the continent, a top official said.

The Blackstone Group is putting its considerable weight behind an effort to ban alternative investment firms from paying contingency fees to placement agents.

In a letter to four of the EU’s finance ministers, U.S. Treasury Sec. Timothy Geithner said the U.S. was working on its own hedge fund rules, and lobbied them to drop a proposal that could block U.S. hedge funds from Europe.

British prime brokerages face a raft of new rules on how they use client money, as U.K. regulators seek to avoid a repeat of the Lehman Brothers disaster.

Despite a report rejecting direct taxes for the Cayman Islands, the British government still wants the hedge fund haven to impose them.

With the prospect of new hedge fund regulations in the U.S. on the near horizon, the industry’s top lobbyist has redoubled its efforts—and doubled its fourth-quarter lobbying budget.

The Managed Funds Association spent $1.08 million over the last three months of 2009 lobbying on such issues as requiring hedge funds to register with the SEC, despite the fact that the measure is a near-certainty and that the MFA itself has expressed support, in principle, for mandatory registration. The MFA also lobbied on President Barack Obama’s proposed Consumer Financial Protection Agency, new derivatives regulations and a proposal that would force defined benefit pension plans to disclose their hedge fund investments, according to a filing with the House of Representatives’ clerk’s office.

Jean-Paul Gauzes, the French member of Parliament directing the Alternative Investment Fund Managers directive through thousands of amendments and intense lobbying from both sides, said last week in London that he wasn’t concerned by possible job losses.

Ponzi scheme victims would have recourse to millions in new tax breaks under a bipartisan proposal introduced yesterday in the U.S. Senate.