Federal Reserve Issues Final Rule for Compliance with the Volcker Rule under Dodd-Frank

The Federal Reserve Board (the "Board") has adopted a final rule (the "Final Rule") implementing the time frame for banking entities to come into compliance with the prohibitions and restrictions on proprietary trading and investment in private equity and hedge funds imposed by Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").

Section 619 of the Dodd-Frank Act, commonly known as the "Volcker Rule," added a new Section 13 to the Bank Holding Company Act of 1956 (the "BHC Act") that prohibits banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with, private equity funds or hedge funds. Entities covered by the prohibition include insured depository institutions, any company that controls an insured depository institution, and affiliates and subsidiaries of such entities. The new Section 13 of the BHC Act also subjects nonbank financial companies