Goodwin Procter partner, Bill Stern, recently published a feature article entitled Impact of the Volcker Rule on fund sponsors affiliated with non-US banking organizations in Butterworths Journal of International Banking and Financial Law. In addition to providing a brief summary of the Volcker Rule, the article makes the following key points.
- Fund sponsors affiliated with banking organizations with a branch, agency or depository institution subsidiary in the U.S. may be subject to the Volcker Rule, even if they conduct their fund activities outside of the U.S.
- The final Volcker Rule regulations tailor the definition of “covered fund” to mitigate to some extent the rule’s extraterritorial impact outside of the U.S.
- Important questions remain about how the Volcker Rule will be applied in practice and will affect certain types of funds, such as funds-of-funds and parallel fund structures.