"Member States of the European Union have been voicing their concerns over the AIFM Directive.

Sweden, which currently holds the presidency of the EU, has given the impression that finding a solution to financial regulation and supervision will be the key policy of its six-month term. Sweden has also warned against 'overzealous' regulation whilst the Irish Fund Industry Association intends to strongly lobby for a re-negotiation of some key aspects of the Directive, as some of its elements are "unworkable or highly unfavourable". From a continental point of view, the socialist parties of France and Germany can be expected to be more approving of the Directive's proposals whereas for Luxembourg the Directive could offer lucrative opportunities thanks to the proposed ban on the distribution of offshore funds.

Laven Partners believes that finding a solution during Sweden's presidency is essential. Spain will take over the presidency in 2010 and is likely to adopt a more controversial policy towards financial regulation.

In a recent industry event discussing the Directive, European Commission Representative Christopher Bercher defended the Directive and noted that the idea of a Directive had been in the European Commission's pipeline for the past four years and as such was not a response to the current financial crisis. Regarding the criticism the European Commission has received in relation to the lack of consultation, Mr. Bercher said that "the EC had not been given such luxury and this decision had been made on a higher level". This, we note, is not a very helpful excuse for the industry.

At the same event, the leader of the FSA's hedge fund managers division Andrew Crain, noted that investors had been absent from the Directive discussions and that more input was required in relation to investors' needs and wishes in terms of regulatory protection. Mr. Crain's comments were met by a strong response from the audience who emphasised that investors had not been vocal due to the fact that they had not been consulted or only very little. The audience raised further concerns over investors' lack of representation and that investors' opinions would not be given enough weight in Directive discussions. The audience noted that investors would be happy to bear the costs of the Directive if it guaranteed to provide regulatory benefits.

Meanwhile, AIMA has claimed that the Directive could cost European pension funds €25bn a year through charges and lower investment returns if the current draft is implemented. The figures were based on an increase in costs to all investors and a reduction in the range of investments available due to the Directive blocking access to over 90% of the alternative investments currently available in Europe.

Laven Partners is currently talking to investors to seek to bring about a forum for a more comprehensive response. We would like to limit any response from investors to 6 key points at most. We will confirm the dates of an informal gathering to take this project further if we can generate sufficient interest. If you would like to share your views or participate in this event please let us know."