GLOBAL - Rudolf Hagendijk, chief executive of Dutch pension service provider Mn Services, has called for more rigorous self-regulation of private equity houses and hedge funds so pension funds can work with them "with a clear conscience".
The news comes as a number of members of the European Parliament (MEPs) have pressed for new legislation to beef up the regulation of hedge funds and private equity investors on the back of the current credit crunch.
Speaking at the AsianInvestor conference of institutional investors and pension funds in Beijing today, Hagendijk said hedge funds and private equity investors should adopt best corporate principles, since perception of the sector is defined by negative examples.
"If those institutions drew up rules for prudent business conduct, pension funds which sought to invest responsibly could work with them with a clear conscience," said Mn Services.
The asset manager and pensions administrator wants to start an open dialogue with hedge funds, private equity houses, employers' and employees' representatives, and several private equity investors are said to have committed themselves to participate in the round table discussion to be held in the Netherlands from November.
In a separate development, MEPs yesterday made a formal request to the European Commission (EC) for new legislation to improve the regulation of financial markets, related, in particular, to hedge funds and private equity.
In a report drawn up by Poul Nyrup Rasmussen (PES, DK), the parliament has asked for a series of legislative measures on issues related to hedge funds and private equity - the report was adopted with 562 votes in favour, 86 against and 25 abstentions.
MEPs want to see principles-based legislation on the valuation of illiquid financial instruments and better transparency requirements on prime brokers, as well as calling for a harmonised EU-wide framework for venture capital and private equity, especially to ensure cross-border access to capital for small and medium enterprises.
Parliamentarians also argued measures should be introduced where needed to avoid unreasonable asset stripping of companies taken over by private investors, while demanding conflicts of interest within financial institutions of all kinds should be tackled.
A wide-ranging review to find gaps in legislation should be started, according to MEPs, while more transparency requirements should be put on investment products in terms of general investment strategy.
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