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OECD steering group engages hedge fund industry on shareholder activism

The Organisation for Economic Co-operation and Development’s Steering Group on Corporate Governance has hosted a high-level meeting involving representatives from the hedge fund industry a

The Organisation for Economic Co-operation and Development’s Steering Group on Corporate Governance has hosted a high-level meeting involving representatives from the hedge fund industry and other activist shareholders to share views on policy issues that could affect the industry.

The meeting in Paris saw hedge fund industry practitioners address members of the OECD group on market issues including insider trading, market manipulation, and shareholder co-operation and acting in concert, as well as the use of derivatives and how they are used in conjunction with investors’ voting rights.

These discussions followed a meeting by the steering group last November with representatives of the private equity industry, where policy issues associated with alternative investors such as private equity firms and hedge funds were discussed. The OECD group has also sounded out the European Venture Capital Association.

The group’s chairman, Marcello Bianchi of the Italian financial markets regulator Consob, says activist investment strategies have an important role to play in maintaining a sound and efficient capital market. Regulatory intervention is nevertheless appropriate in some instances, but should be informed by careful analysis about the nature of the issue and about the costs and benefits of proposed policy actions.

According to Andrew Baker, deputy chief executive of the Alternative Investment Management Association, who led the industry delegation, the association is keen to continue working closely with the OECD steering group on its wider discussions of policy in the area of shareholder activism.

‘Aima welcomes the opportunity to present its views to the Steering Group on Corporate Governance, given the powerful influence that this group has on the policy debate with respect to shareholder activism,’ Baker says. ‘We entirely agree with the steering group that activism is an inextricable part of ensuring capital market integrity and high levels of corporate governance.’

Aima has more than 1,280 corporate members in 47 countries worldwide including managers of hedge funds and funds of hedge funds, prime brokers, providers of legal and accounting services and fund administrators.

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