Louis Bacon, the veteran hedge fund manager, has criticised the European authorities for its "demonisation" of the alternative investment industry and its desire to adopt a stance of "First Kill All the Canaries in the Mineshafts", in a rare outburst for the usually low-key trader.

Bacon, who is founder of Moore Capital, has made the comments as the controversial Alternative Investment Fund Managers' Directive, which would impose notable restrictions on the European hedge fund and private equity industries, enters its final stages.