EU lawmakers soften demands to control fund manager pay
STRASBOURG, France (Reuters) - European lawmakers called on Wednesday for rules to limit the cash bonus paid to fund managers, but shied away from demanding the strict bonus caps that they pushed through for bankers earlier this year.
Instead, the parliament suggested fund managers should get a higher proportion of their bonuses in shares in the fund as well as deferring part of the payment, reforms that received a cool response from investors in funds.
"This is a dark day for investor protection," said Sven Giegold, a German member of parliament who had fought an increasingly lonely campaign for a strict limit on fund manager bonuses.
"A comprehensive change of the culture in the financial industry has been forestalled," he said.
The vote in parliament on Wednesday sets the scene for talks with EU countries. Both sides must agree before any such rules for fund managers are introduced across the European Union's 28 member states.
The new milder rules, once agreed, will affect the managers of mutual funds, which have about 6 trillion euros ($7.8 trillion) under management. They won't apply to hedge funds or private equity.
Many in Europe blamed the global financial crisis on a bonus-driven banking culture that rewarded reckless risk-taking.
But legislators were reluctant to rule so strictly on fund managers, whose role as guardian of pension funds is seen as posing far less threat to financial stability.
"I do not think it is appropriate to roll out the same bonus cap across all financial services legislation," said Sharon Bowles, a British member of parliament. Continued...