When new European Union rules on alternative investments came into force in July, most US private equity firms yawned. They believed there was no urgent need to take out a licence under the Alternative Investment Fund Managers Directive – there were other ways to comply with it, cheaper and much less laborious.

Now the market is beginning to wake up to the possible dangers of maintaining that position in the longer term. Lawyers are raising worries that while private equity firms can operate under AIFMD without a licence, the line they tread by doing so may be finer than was first thought.