Sovereign wealth funds (“SWFs”) are among the most important players in modern capital markets. In recent years, they have drawn attention from the public because they have invested billions of dollars (and Euros) in equity, taking stakes in listed companies all over the world. The significant amount of money under their management and their public nature have caused a rise in concerns about their regulation. In this regard, one of the most discussed issues raised by the SWF phenomenon is the need for more information about them and, in particular, the possibility to oblige them to be more transparent.
Indeed, the problem of SWFs’ transparency could be faced from different points of view. First, disclosure requests often aim to determine if a SWF is a mere instrument in the hands of a state to pursue political interests. For example, the importance of information regarding the internal structure and organization of SWFs is often highlighted in order to identify their system of corporate governance and the level of independence from the government. Moreover, there is a need to know what interests SWFs follow when they decide where to invest their money and how to manage their investment in order to understand if they have financial or political intentions. In this regard, transparency is seen as an alternative to stricter protectionist rules, such as those already in force in strategic sectors. In other words, the problem underpinned by these disclosure requests is to recognize and discourage SWF investments driven by political intent and prevent countries from benefitting domestic companies by harming foreign competitors or importing industrial knowledge. From this point of view, a system of mandatory disclosure specifically imposed on SWFs is difficult to imagine: it would mean that a sovereign state obliges another to act in a specific way. This is the reason why the Santiago Principles—the well-known international set of voluntary principles and practices developed in 2008 by the International Working Group of Sovereign Wealth Funds—whose purpose is to “reduce protectionist pressures and help maintain an open and stable investment climate,”8 are the only way to discipline SWF behavior.
Apart from these political concerns, another point of view deserves to be explored. This point of view is one that considers SWFs not as agents of other countries but simply as special actors in financial markets, a particular class of institutional shareholders that stand alongside other (more common) institutional investors, such as mutual funds and hedge funds.9 In this light, the problem of SWF transparency becomes a matter of financial market regulation and involves the private interests of target companies and/or their shareholders and the general interest in market efficiency.10 This is the specific perspective that we adopt in this Article to analyze the problem of SWF transparency and determine if the current European (and Italian) financial market rules on institutional investor transparency, directly imposed on mutual funds and hedge funds, can also apply to these special institutional investors despite their peculiarities. In other words, we will try to understand whether institutional shareholders’ duties of transparency should be applied to SWFs, taking into account the interest in financial market efficiency and whether such duties already apply to SWFs under existing legal provisions.
