Regulating the so-called 'Vultures of Capitalism'

This article analyses the legislative process surrounding the new directive covering hedge funds and private equity firms: the Alternative Investment Fund Mangers Directive (AIFMD), adopted in late 2010. AIFMD merits study as the first effort to create an EU legal framework for increasingly important and controversial elements of several Member State financial systems. This directive also provides a good case study of the difficulties that the politicization of highly technical financial legislation can bring – notably in terms of poorly designed draft legislation. Further, the adoption of AIFMD merits study as an example of the impact of intense industry lobbying at the EU level – despite the determination of several powerful Member State governments and many Members of the European Parliament (MEPs) to adopt far-reaching legislation. Industrial associations, bolstered by the British government, were able to bring about the adoption of a directive that was reworked significantly from previous versions to diminish the additional constraints and costs imposed on AIFM.