Europe's booming hedge funds and private equity groups face renewed pressure to submit to tighter regulatory control, after Socialist MEPs warned that the industry's rapid growth threatened to undermine the European Union's social achievements.
Leading Socialist deputies in the European parliament presented a report into the hedge fund and private equity sectors yesterday that advocated measures to curb the influence of activist investors on businesses and workers, or what the report calls the "real economy".
The intervention by parliament's second-biggest political force is unlikely to lead to tougher rules for the industry by itself. However, the trenchant critique contained in yesterday's report highlights the broadening concern among European policymakers about the rapid growth of hedge funds and private equity groups.
In countries such as Germany, politicians have criticised activist investors for allegedly pursuing quick profits at the expense of the long-term viability of companies and jobs. Several European policymakers and regulators have also warned of the risk posed by hedge funds to the stability of the financial system.
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