Volcker Rule Update

September 15, 2014

On December 6, 2013, five federal financial regulatory agencies – Board of Governors of the Federal Reserve System (FRB); Office of the Comptroller of the Currency (OCC); Federal Deposit Insurance Corporation (FDIC); Securities and Exchange Commission (SEC); and Commodity Futures Trading Commission (CFTC) (collectively the “Agencies”) – each approved their own final regulations implementing section 619 of the Dodd-Frank Act (Regulations), which is known as the Volcker Rule.

The Volcker Rule seeks to limit certain risks that Congress believed insured depository institutions and certain foreign banking organizations with U.S. operations and their respective affiliates (banking entities) might be exposed to in connection with short-term proprietary trading and investments in and certain relationships with private equity funds and hedge funds (covered funds). The principles set forth in the Volcker Rule are implemented by the Regulations.

The FRB has extended the period for banking entities to conform with the Regulations until July 21, 2015. During that period, each banking entity is expected to engage in good faith efforts that will result in conformance with the Regulations for all of its activities and investments.

Since the adoption of the Regulations there have been a number of developments regarding the obligations imposed on banking entities.

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