EUROPE - EVCA placement code highlights need for transparency

While falling short of anything that is likely to radically alter perception, the code sets out the sort of basic governance guidelines that most placement agents will argue they already adhere to. For such firms, the hope will be that these steps will prevent the knee-jerk reaction to the scandal in the US spreading to Europe. It is also likely that, if accepted, these proposals should help to establish the differences between well-established placement businesses and the 'finders' that flourished during the boom years and that have been largely blamed for the crisis.

The code sets out basic rules relating to the business of placement agents, though it is best described as a description of the industry rather than prescriptive regulation. Aside from emphasising the need to be registered with appropriate regulatory bodies, these basic provisions include the need to maintain "professionalism" of conduct and to have a written contract with clients. Necessary defining standards, though not earth-shattering.

The most important rules relate to disclosure, which is where the paper seeks to directly address the issues raised by the recent scandal in New York. The proposal states that firms should not make payments designed to induce business from the recipient, and further that all payments relating to prospective or existing clients should be disclosed. It also demands disclosure of all engagements with any "former employee" or "anyone in the decision making chain" of a Government pension plan, and details of any "political" or "quasi-political" donations that have been made.

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