SEC and Other Organizations Issue Guidance to Exclude Community Banks From the Scope of the Volcker Rule

The SEC and several other government agencies — including the Federal Reserve Board, CFTC, FDIC, and OCC — have jointly issued a final rule, Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds, in response to amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Under the final rule, “community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5 percent or less of total consolidated assets” are excluded from the scope of the Volcker Rule. In addition, the final rule permits certain hedge funds or private equity funds to “share the same name or a variation of the same name with an investment adviser as long as the adviser is not an insured depository institution, a company that controls an insured depository institution, or a bank holding company.”

For more information, see the press release and final rule on the SEC’s Web site.