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11-6-09 10:55 AM EST | E-mail Article

BRUSSELS -(Dow Jones)- Legislation drafted by the European Commission that would tighten regulation of hedge funds and private equity firms is "poorly constructed, ill-focused and premature," according to a study requested by the European Parliament.

The parliament's economics committee is about to launch debate over the legislation, which would require most funds managing more than EUR100 million to register with the EU and disclose information about their positions.

The legislation would also impose minimum capital requirements for funds, prompting an outcry from funds that often use leverage to juice their returns.

The study, written by the firm European Economics, claims the legislation will raise legal compliance costs more than anticipated by the Commission, disadvantage European funds compared with other funds in other regions, and set leverage levels so low that many funds would be forced out of business.

-By Matthew Dalton, Dow Jones Newswires; +32 2 741 1487; matthew.dalton@ dowjones.com 


  (END) Dow Jones Newswires
  11-06-091055ET
  Copyright (c) 2009 Dow Jones & Company, Inc.
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