Pillsbury Winthrop Shaw Pittman

The Volcker Rule — a suggested approach for banking entities when analysing its impact on business models, activities and transactions

By Joseph T Lynyak III and Anthony H Schouten

More than three years following the passage of the Dodd-Frank Act, and intense inter-agency negotiations, the federal financial regulatory agencies collectively adopted the final version of the ‘Volcker Rule’ or ‘Rule’ — which imposes new and potentially severe limitations on domestic and foreign banking entities’ activities in regard to proprietary trading and investments in ‘covered funds’. The 72-page final Rule is accompanied by more than 800 pages of interpretative guidance, to address more than 1,200 questions that the federal agencies asked commenters to address.

This alert provides an overview of the principal elements of the Rule and identifies several significant concerns that have already been raised by industry participants. Importantly, we provide our thoughts regarding the process by which banking entities might analyse their current business models and transactional structures, with the goal of avoiding an interruption in deal flow and/or business models by identifying possible coverage by the Rule, as well as adopting modifications to comply with the Rule and prevent or minimise adverse business consequences.

Additional alerts will explore in detail categories of activities and transactions affected by the Rule, as well as interpretative guidance issued by the federal financial regulatory agencies…

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