U.K. Regulator ‘Comfortable’ With Fund Managers Earning Millions
Fund managers are entitled to be paid millions of pounds if they’re delivering high returns for investors, the U.K. markets regulator said, the first sign it won’t seek to impose wage caps on the industry.
Regulators around the world have introduced measures to rein in bankers’ pay after risky bets by traders and executives were blamed in part for causing the 2008 collapse of Lehman Brothers Holdings Inc.
Pay for fund managers is covered by a less restrictive set of European Union guidelines. The European Securities and Markets Authority said in February last year that bonuses for risk-taking employees should be withheld for a period of time to align managers’ interests with the long-term performance of their fund.
The discrepancy in pay and a crackdown on risk is one of the reasons some traders have left investment banks to join the hedge-fund industry. A Barclays Plc (BARC) trading team is leaving this year to start a quantitative investment firm, taking 60 employees with it.
The Financial Stability Board, which brings together regulators and central bankers from the Group of 20 nations, is reviewing whether investment funds that manage more than $100 billion in assets may be labeled too big to fail.
Source: bloomberg
