Future Regulation of Private Funds: How the Draft EU Directive & US Legislative Proposals Compare

The new world order for private funds is beginning to take shape, from a regulatory perspective at least.  We now have legislative proposals to apply additional regulation to private funds – hedge funds and private equity funds – on both sides of the Atlantic: legislation introduced in the U.S. Congress and, last week, a draft EU Directive on Alternative Investment Fund Managers.  Both sets of proposals will potentially add significant additional regulatory obligations and cost.  However, as the proposals stand to date, the changes seem likely to add greater additional burden for those managing private funds from an EU jurisdiction than their U.S. competitors.  Some of the proposed changes on both sides of the Atlantic are welcome – but some, particularly in the EU proposals, are of doubtful benefit and have the potential to add significant additional cost for the industry.  In a guest article, Richard Horowitz, a Partner at Clifford Chance US LLP, compares the likely shape of future regulation of private funds in the U.S. and the EU.

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