Volcker Rule

Agencies are Reviewing Treatment of CDOs Backed by Trust Preferred Securities Under the Volcker Rule

On December 27, the Fed, FDIC, OCC and the SEC stated that they are in the process of reviewing whether it would be appropriate to subject collateralized debt obligations backed by trust preferred securities to the Volcker rule.  The agencies intend to address the matter no later than January 15, 2014Statement.

Final Rules Implementing the Volcker Rule

On December 10, the Fed, CFTC, FDIC, OCC and SEC issued final rules to implement Section 619 of the Volcker Rule Act (the Volcker Rule), which prohibit insured depository institutions and banking entities from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options for their own account.  Banking organizations covered by the rules will be required to fully conform their activities and investments by July 21, 2015.  Joint ReleaseFinal RulesFact Sheet.

Volcker Rule Conformance Period Clarification

On April 19, the Fed, CFTC, FDIC, OCC and SEC issued a joint release clarifying that an entity covered by Section 619 of the Dodd-Frank Act, or the Volcker Rule, will have the full two-year period from the statutory effective date through July 21, 2014 in which to fully conform its activities and investments to the Volcker Rule requirements and any implementing rules adopted under the Volcker Rule, subject to the two-year period being extended by the Fed.  Fed Release.  Joint Release.

CFTC Proposed Regulations on Volcker Rule

On January 11, the CFTC approved proposed rules implementing the requirements of Section 619 of the Dodd-Frank Act, otherwise known as the “Volcker Rule”. The proposed rulemaking is substantively similar to the rulemaking jointly proposed by the Fed, the OCC, the FDIC, and the SEC in October 2011. However, the proposed rulemaking includes fourteen new questions relating to certain matters under the CFTC’s jurisdiction, including the scope of the definition of “commodity pool” which is categorized as a “covered fund”. Comments must be submitted within 60 days after publication in the Federal Register, which deadline will be at least 30 days after the deadline for submitting comments on the joint-agency proposed rulemaking. CFTC Release. CFTC Proposed Rule.

Comment Period Extension for Volcker Rule

On December 23, the Fed, FDIC, OCC, and SEC extended the comment period on proposed regulations implementing the Volcker Rule to February 13. The Volcker Rule requires regulators to implement restrictions on the ability of banks and nonbank financial companies to engage in proprietary trading and to have certain interests in, or relationships with, hedge funds or private equity funds. Interagency Release.

Comment Period Extension for Volcker Rule

On December 23,the Fed, FDIC, OCC, and SEC extended the comment period on proposed regulations implementing the Volcker Rule to February 13. The Volcker Rule requires regulators to implement restrictions on the ability of banks and nonbank financial companies to engage in proprietary trading and to have certain interests in, or relationships with, hedge funds or private equity funds. Interagency Release.

ASF Sunset Seminar: Conflicts and Volcker Rules—Will Traditional Securitizations Survive Them?

During the ASF Sunset Seminar on November 16 in New York, panelists, including Orrick Partner Mike Mitchell, will discuss examples of everyday transactions and trades that may be affected by the recently proposed Volcker Rule and the rule on conflicts in securitizations. For more information, click here.

Implementation of the Volcker Rule Provisions Affecting Private Fund Sponsorship and Ownership

During the week of October 10, the Fed, the FDIC, the OCC, and the SEC proposed rules implementing Section 619 of the Dodd-Frank Act, otherwise known as the “Volcker Rule”. The Volcker Rule generally prohibits a banking entity from engaging in proprietary trading or acquiring or retaining any ownership interest in, or sponsoring a private fund. This Alert provides a summary of some of the most significant provisions of the rulemaking that directly impact the sponsorship of, and ownership of interests in, private funds by banking entities, including securitization transactions. Click here to read the full alert.

Proposed Regulations on Volcker Rule

On October 11, the SEC, Fed, FDIC and OCC each issued a request for comment on proposed regulations implementing the requirements of Section 619 of the Dodd-Frank Act, otherwise known as the Volcker Rule. The Volcker Rule generally prohibits: (i) insured depository institutions, bank holding companies, and their subsidiaries or affiliates from engaging in short-term proprietary trading of any security, derivative, or certain other financial instruments for a banking entity’s own account; (ii) owning, sponsoring, or having certain relationships with, a hedge fund or private equity fund; and (iii) banking entities from engaging in an exempted transaction or activity if it would involve a material conflict of interest between the banking entity and its clients or counterparties or would result in a material exposure to high-risk assets. Comments must be submitted by January 13. Proposed Rule. Fed Release. FDIC Release. OCC Release.

GAO Report on Proprietary Trading and the Volcker Rule

On July 11, pursuant to Section 989 of the Dodd-Frank Act, the GAO issued a report on: (i) known risks and conflicts of interests associated with proprietary trading and the potential effects of the Volcker Rule; and (ii) how regulators have overseen such trading in the past and what challenges they will face implementing the Volcker Rule. GAO Summary. GAO Report.