• Volcker Rule in Flux
  • December 16, 2011 | Author: Benjamin B. Coulter
  • Law Firm: Burr & Forman LLP - Birmingham Office
  • The Volcker Rule regulates the ability of a banking entity or a nonbank financial company supervised by the Board of Governors of the Federal Reserve System to "engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund." Boiled down, the rule, at least as currently proposed, would prohibit banking entities from proprietary trading and from owning an interest, other than a de minimis interest, in certain hedge funds and/or private equity funds that they sponsor and from investing more than three percent of their Tier 1 capital (total regulatory capital) in such funds. The rule would affect thousands of FDIC-insured depository institutions, their parents, and affiliates.