Federal Agencies Issue Amendments to Volcker Rule

Five financial regulators, including the SEC, have jointly issued a final rule, Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds. The final rule modifies “the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds — known as covered funds.” Specifically, the final rule amends the Volcker rule by (1) “streamlining the covered funds portion of [the Volcker] rule,” (2) “addressing the extraterritorial treatment of certain foreign funds,” and (3) “permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address.” The final rule is effective on October 1, 2020.

For more information, see the press release as well as statements by SEC Commissioners Hester M. Peirce, Elad L. Roisman, and Allison H. Lee on the SEC’s Web site.