Why this hedge fund backlash has no teeth

European politicians including President Sarkozy and Chancellor Merkel (pictured) are determined to reign in hedge funds. The industry has little to fear - although some better PR wouldn't go amiss, says Simon Nixon.

Generations of European politicians dreamed of it. Armies of lawyers and bureaucrats spent years squabbling over the rules. But it has taken hedge funds to make it happen. Activist investors are changing the face of Europe, breaking down borders, building stronger companies, revitalising national economies and imposing their own rules of the game. Twenty-one years after the Single European Act and eight years after the introduction of the euro, the EU is finally delivering. And the eurocrats don't like it one little bit. In fact, they seemed determined to try to stop it.

What these European politicians can't stand is that they're not in control of the process. They got their first taste of how this brave new world might unfold two years ago, when a couple of hedge funds put the kybosh on Deutsche Brse's plans to buy the London Stock Exchange and forced its CEO out of his job. Then last year, hedge funds took on the French government and won over Arcelor, forcing the steel group to accept a bid from Lakshmi Mittal. This year, activists are on the rampage across the continent, demanding change and instilling terror in complacent boardrooms.

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Simon Nixon

Simon is the chief leader writer and columnist at The Times and previous to that, he was at The Wall Street Journal for 9 years as the chief European commentator. Simon also wrote for Reuters Breakingviews as the Executive Editor earlier in his career. Simon covers personal finance topics such as property, the economy and other areas for example stockmarkets and funds.