Europe’s bonus clampdown hits two-thirds of fund managers

‘Very Disappointed’

“We are very disappointed with the vote,” said Jarkko Syyrila, deputy director general of Brussels-based EFAMA. “We feel this is very unfair. The rules are even tougher than for banks. There is no level playing field.”

Yesterday’s committee vote was a draft negotiating position, which will be sent to the full European Parliament where it will be voted on again and can be amended. Once that has happened, Giegold, the Parliament’s lead lawmaker on the proposal, and a team from the body’s economic and monetary affairs committee, will start talks with governments on implementing the final version. After they thrash out a deal, it will be confirmed by the Parliament and ministers before being sent to individual parliaments for implementation.

“There’s a better chance of getting this diluted because Parliament is more divided on fund manager pay than it is on the issue of bankers’ pay,” said Irving Henry, prudential specialist at the London-based IMA, which represents U.K. fund managers. “Banks are seen as far more political and toxic.”

‘Greater Protection’

One reason why the Parliament has been so tough on fund managers is they are concerned banks could bypass their own rules by moving risk-taking employees and traders into their asset-management divisions, Henry said. “They need a victory at least on the banking framework before they can ease up elsewhere,” he said.

The “vote would ensure greater protection for investors and help reduce excessively risky speculation,” Giegold, 43, said in an e-mailed statement yesterday. “The rules as voted would be an important step toward ending the gambler mentality in the investment fund sector.”

Giegold is a founder of the German branch of ATTAC, which was set up in France in 1998 and seeks to have financial markets and global trade regulated and tax havens closed. The organization last year invaded a meeting of the European Parliament’s economic and monetary affairs committee, which deals with financial regulation.

One way of achieving Giegold’s goal of aligning the interests of investors and fund managers is to increase disclosure of compensation in the industry, according to Christopher Traulsen of Chicago-based Morningstar Inc., which tracks mutual funds.

“Regulators need to step up and require accurate disclosure of the names, tenures and prior experience of the individuals responsible for managing the fund and the structure of their incentive pay,” he said in an e-mail. “We believe this would achieve many of the sought-after benefits without imposing an actual cap on the level of incentive pay.”

Bloomberg News

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