The federal financial agencies on December 10, 2013, approved joint final regulations implementing section 619 of the Dodd-Frank Act, commonly referred to as the Volcker Rule. Section 619 added a new section 13 to the Bank Holding Company Act of 1956 that generally prohibits any banking entity from engaging in proprietary trading and from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with, a hedge fund or a private equity fund, subject to exemptions for certain permitted activities. The Final Regulation made numerous changes to the proposed regulations, which had been subject to an unprecedented number of comment letters. These changes address many, but not all, of the concerns raised.

This Legal Update addresses the impact of the Final Regulation on securitization activities and therefore focuses on the prohibition on covered funds activities and certain of the exceptions thereto, including with respect to commodity pools, foreign issuers, the interrelationship of covered funds and Super 23A and various other exclusions and definitions relevant to securitization.

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