Hedge Funds, Facing Increased Oversight, Say Industry Creates 300,000 Jobs

Hedge funds are touting their record of creating jobs after politicians demanded increased regulation of the industry and restrictions on bonus payments.

Hedge funds have 100,000 staff globally and lead to the employment of an additional 200,000 people at companies such as law and accounting firms, the London-based Alternative Investment Management Association said in a statement today. About 240,000 of the workers are based in North America, AIMA said.

“It demonstrates the importance of the industry to the broader economy,” AIMA Chief Executive Officer Andrew Baker said in the statement. “The hedge-fund industry provides value not only to its investors and to the markets in which it operates, but to the communities where employees work.”

AIMA is publishing the jobs report after European lawmakers in November approved regulations requiring hedge funds to set limits on their use of leverage and to avoid pay practices that encourage risk taking. Former Danish Prime Minister Poul Rasmussen and other politicians blamed hedge funds for contributing to the 2008 financial crisis, in which Europe’s largest pension funds lost $560 billion.

Hedge funds are mostly private pools of capital whose managers participate substantially in profits from bets on whether assets will rise or fall. Funds usually charge investors 2 percent of assets under management and 20 percent of investment returns.

The employment figures are based on a survey of hedge-fund managers, the first of its kind, AIMA said.

More Oversight

Of the 300,000 individuals, 50,000 work in Europe and 10,000 are employed in Asia, according to the survey. By comparison, Bank of America Corp. and JPMorgan Chase & Co., the biggest U.S. banks by assets, employ a combined 520,810 people.

Pascal Canfin, a French Green party member of the European parliament, said the survey doesn’t change his view that hedge funds need more oversight. He proposed legislation last month to ban traders from short-selling swaps tied to corporate and sovereign debt if they don’t hold the underlying bonds.

“Reducing fire-arm regulation could also create a lot of jobs,” Canfin said. “Moreover, we are sure that these 300,000 qualified people could be employed in more useful activities for society than speculation on markets.”

To contact the reporter on this story: Jesse Westbrook in London at jwestbrook1@bloomberg.net.

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net.

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