Hedge Funds vs. Greece: Lobbyists Want "Cheap Ticket" to Speculation
This summer, Greece's financial authorities fined 20 hedge funds for
speculating against the Greek economy. Now, the main global lobby group
for hedge funds is trying to tweak the EU's rules so they can have a
free play in the future.
Global hedge funds attacked Greek banks in the early part of 2015.
These were the months when the Greek economy was particularly fragile
and in danger in the aftermath of the change of government in January of
that year. In the wake of years of continuing economic crisis and harsh
austerity, the new government was battling with its creditors to get a
new and better deal from the EU. In response to Greek intransigence and
hesitance to sign up to austerity programmes, the European Central Bank
issued regular threats that liquidity to Greek banks could be cut off.
At this point, 20 hedge funds - including JP Morgan Securities and
Quantum Partners - moved in to do what they always do: speculate to make
money. They sold Greek bank shares short, spreading doubt about the
resilience of Greece's banking sector. Out of fear of an economic
collapse, the Greek financial services authority (the Hellenic Capital
Market Commission, HCMC) stepped in to stop them, handing out fines to all 20 from €10,000 to €460,000.
In response, the financial lobby is now trying to avoid a repetition.
The hedge funds' lobby group AIMA (Alternative Investment Management
Association) is now trying to blow a hole in the EU rules on "short
selling" so they can escape similar blocks and sanctions in the future.
This can be seen from documents
obtained by Corporate Europe Observatory from the EU financial
regulation agency ESMA (European Securities and Markets Authority).
Ahedge fund lobby group, the Alternative Investment Management
Association, is now trying to blow a hole in EU rules on "short selling"
so they can escape blocks and sanctions in the future. (Image: Greek flag via Shutterstock)
