Alumnus offers sought after legal advice

In the wake of the 2008 financial crisis, politicians have been determined to step up regulation over that part of the financial sector some regard as the main driver of the "casino" economy. And it's this desire to regulate the derivative and hedge fund industries which has resulted in Zimbabwe-born attorney Michael Denenga becoming a sought-after adviser.

As JP Morgan posted a US$2bn loss a fortnight ago on the back of a derivatives trade gone wrong, calls for tighter regulation of the banks have gathered momentum. This, together with newly proposed regulations forcing the banks to move away from using depositors' money to make risky bets, has led to a growing number of hedge funds being set up. As a director of Prinsloo, Tindle & Andropoulos Inc, a commercial law firm, Denenga has helped a number of international banking groups including boutique offshore hedge funds to set up their operations in SA. Denenga began his career as a candidate attorney at Webber Wentzel after completing his LLB at Rhodes University


In 1995. However, in 2002 after being admitted as an attorney he soon realised financial services was his real passion. And as a way of getting closer to the industry he joined the SA Insurance Association as a lobbyist, during which time he assisted in the development of the financial services charter and the Black Economic Empowerment Act. In 2003 he joined Standard Bank treasury as a treasury legal adviser.

A year later he left to join Investec in a similar role. Though SA, unlike other jurisdictions, has always taken a conservative view on banking regulation, Denenga remembers a few traders at the banks constantly pushing the boundaries. "When you work as a legal adviser within banks you may be perceived as preventing lucrative deals from taking place but our job is to draw the legal line."

Having had a taste of banking, Denenga yearned for the law. He returned to Webber Wentzel as a partner. However, in 2009, in anticipation of an economic revival in Zimbabwe, Denenga once again left Webber Wentzel to set up a specialist practice based in his country of birth. Yet despite demand from the investment community, including clients' need for advice on the indigenisation act, among others, the political situation remained unstable.

"It was just too soon to provide specialist and exotic device," Denenga says. The experience seems to have shaped his attitude towards regulation. "As SA moves towards implementing legislation for the hedge fund industry, it's important that regulators get the right balance between prudent oversight and over regulation or else it risks losing much needed investment flows."

Lindo Xulu

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