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August 2010 
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Proposals To Curb Hedge Fund, Private Equity Pay Watered Down |
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Claire Spencer, November 2009 |
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(27 November 2009)
The European private equity and hedge fund industry breathes a sigh of relief today, after EU proposals to curb pay in the sector were watered down, according to a report in the Telegraph. The idea was introduced just two weeks ago by Sweden, which currently holds the EU’s rotating presidency.
The old version was of particular concern to hedge fund managers, who are normally paid a low basic salary based on the expectation that they will earn most of their money from successful trades.
However, a revised draft was published yesterday, which seems to resemble those planned to control bankers’ pay, says the report.
Notably, the previous requirement to defer “40 percent or 60 percent” of any bonus for three years has been removed. In its place is a new requirement deferring bonuses “over a period which is appropriate in view of the life cycle and redemption policy.”
Furthermore, the new draft allows the pay to be “correctly aligned with the nature of the risks” of the individual fund.
The newspaper notes that the hedge fund and private equity industry has been intensively lobbying the European authorities for the past two weeks, and this appears to have paid off.
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