Implications of the Volcker Rule - Managing Hedge Fund Affiliations with Banks

March 15, 2010

On January 21, 2010, President Obama proposed the "Volcker Rule" intended to limit the size and scope of banking institutions. The Volcker Rule would prohibit depository institutions and their bank holding companies (BHCs) from owning, investing in, or sponsoring hedge funds, private equity funds, or proprietary trading operations. If enacted into law, the Volcker Rule would require BHCs to divest their investments in hedge funds and would restrict BHC affiliations and transactions with hedge funds. Accordingly, hedge fund managers could be faced with managing investor divestitures, including their own investments in the funds they manage, as well as managing limitations on their funds affiliating with BHC service providers going forward. Please click here to view the complete article recentely published in The Hedge Fund Law Report.