On December 10, 2013, five federal agencies—the Federal Reserve, CFTC, SEC, FDIC and OCC (the “Agencies”)—issued uniform final regulations (“Final Rules”) implementing the “Volcker Rule.” The issuance of the Final Rules was the result of multi-year negotiations, lengthy rule-writing process and much debate among the Agencies and market participants.  

The Volcker Rule generally prohibits “banking entities”—which include FDIC-insured depository institutions, any company that controls an FDIC-insured depository institution, any company that is treated as a bank holding company and any affiliate or subsidiary of any of the above—from:

  • engaging in the proprietary trading of financial instruments; and
  • owning, sponsoring, or having certain relationships with hedge funds or private equity funds (“Covered Funds”). 

The Firm has recently prepared a Client Alert on the Volcker Rule.  If you would like a copy, please let us know.

Changes at the CFTC

Recently, Commissioner Chilton also informed the President that he plans to resign soon, but under current CFTC rules could stay in office through 2014. Commissioner Chilton's announcement comes on the heels of Commissioner Sommers' resignation in July earlier this year.

Although the President has appointed J. Christopher Giancarlo to replace Sommers, the Senate has yet to confirm his appointment. Other Commissioners who remain in office are Commissioner Scott O'Malia (a Republican appointee) and Commissioner Mark Wetjen (a Democrat appointee).

At the Division level, Gretchen Lowe has been named as Interim Director of Enforcement as a result of the departure of David Meister in October. Finally Vincent McGonagle was recently named in October as Director of the Division of Market Oversight.

CFTC Releases Enforcement Division’s Annual Results

The CFTC announced that it filed 82 enforcement actions in fiscal year 2013 (FY 13), bringing the total over the past three fiscal years to 283, nearly double the number of actions brought during the prior three fiscal years. In addition, the Division of Enforcement (Division) obtained orders this year imposing more than $1.7 billion in sanctions, including orders for more than $1.5 billion in civil monetary penalties and more than $200 million in restitution and disgorgement. This year's civil monetary penalties total more than seven times the Commission’s operating budget for the fiscal year. The Division also reported that it opened more than 290 new investigations in FY 13, adding to the numerous investigations previously opened. The Division noted that while the number of actions filed is among the highest annual figures in program history, that total is down compared to FY 12.