Banking Entity

Financial Regulators Modify Volcker Rule


On June 25, financial regulatory agencies modified the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds, known as covered funds. The final rule permits banking entities to offer financial services and engage in other activities that fall outside of the issues that the rule was intended to address, and it streamlines the covered funds portion of the rule. The rule will be effective as of October 1. Release. Final Rule.

As Volcker Rule Implementation Lumbers On – Some Practical Considerations

The “Volcker Rule,” enacted into law on July 21, 2010 as Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, subject to certain exceptions, prohibits a “Banking Entity” from engaging in proprietary trading activities or acquiring or retaining any equity, partnership, or other ownership interest in, or sponsoring an issuer that would be, an investment company under the Investment Company Act of 1940, but for Section 3(c)(1) or 3(c)(7) thereof, or such similar funds as determined by the appropriate regulatory agency.  By its terms, the Volcker Rule will become effective on July 21, 2012. However, it is now acknowledged that the regulators will not be able to provide advance guidance, as required by the law, regarding the myriad interpretative issues raised.
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