U.S. should allow foreign fund investments: banker

By John Poirier

NEW YORK, Nov 6 (Reuters) - The United States, which promotes cross-border investments, should play fair with sovereign wealth funds, a top executive at Houlihan Lokey Howard & Zukin investment bank said on Tuesday.

Sovereign wealth funds are commonly used by countries to invest surplus reserves. The biggest funds include oil exporters like Kuwait and Norway, as well as China, which just launched a $200 billion fund to invest part of its massive trade surplus.

U.S. and international financial authorities have voiced concern with the lack of transparency in the government-controlled funds and don't want the funds to be used for political leverage.

"From my political perspective it does bother me that we try to create the rules that says everyone has a fair opportunity to invest in a capitalistic world and then we somehow limit ... the people who play it (the rules)," Jeff Werbalowsky, Houlihan's co-chief executive officer, said at the Reuters Finance Summit in New York.

Werbalowsky, whose investment bank along with Lazard is advising Iraq on restructuring its debt, said Washington should set a standard for fair play.

"Free movement of capital ultimately is very good for the world and for us," he said.

Last month U.S. Securities and Exchange Commission Chairman Christopher Cox expressed concerns about the rise of sovereign wealth funds and state-owned publicly traded companies, saying they "challenge our regulatory model."

The growing clout of sovereign wealth funds was a major topic at last month's meeting of global finance chiefs.  Continued...