Proprietary Trading

Two years ago, on July 21, 2010, President Obama signed into law a package of financial regulatory reforms unparalleled in scope and depth since the New Deal. The Dodd-Frank Act was intended to restructure the regulatory framework for the US financial system, with broad and deep implications for the financial services industry where the crisis started. But its impact also was intended to be felt well beyond the financial sector, extending federal regulation into areas of corporate governance applicable to all US public companies.

Few provisions of the Dodd-Frank Act took effect in the summer of 2010. Instead, the specifics of the Act were intended to be developed through the federal rulemaking process, as the Act mandated the development and implementation of nearly 400 separate regulations to be enacted by, or coordinated among, nearly a dozen federal departments or agencies. To date, the deadlines for more than half of the required rulemakings have expired. But even with these delays, the last two years have witnessed the promulgation of more than 100 rules and the issuance of many additional proposed regulations for public comment. This Report discusses the many strides that have been made pursuant to the Act to date and forecasts what is yet to come.

Click here for a PDF of the full report.

Heath P. Tarbert, partner and head of Weil’s Financial Regulatory Reform Working Group, was quoted on BankDirector.com regarding the predicted effect of the Dodd-Frank Act’s Volcker rule. The Volcker rule goes into effect next month and will place two significant restrictions on financial institutions: (1) a prohibition on proprietary trading; and (2) a ban on certain hedge fund and private equity activities.

Mr. Tarbert was quoted as follows: 

I am generally skeptical of the Volcker rule’s purposed benefits to bank safety and soundness. I think appropriate capital, leverage, and liquidity requirements—when combined with a robust risk management framework and culture inside each institution—will do far more to lower the risk profile of large banks. Moreover, the Volcker rule in its current form only compounds the problem by requiring regulators and market participants to make, in some cases, spurious distinctions between and among proprietary trading, market making and hedging.

The June 26, 2012 article, entitled “Volcker Rule: Hero or Villain?” was written by Kelsey Weaver and was published on BankDirector.com.

The October 25, 2011 webinar titled “The Volcker Rule’s Impact on Private Funds: Recent Rulemakings and Market Trends” is now available on demand.

The program featured Weil’s Harvey Eisenberg, Derrick Cephas, and Heath Tarbert and addressed recent and forthcoming rules pursuant to the Dodd-Frank Act’s Volcker Rule (Section 619) whereby large, systemically important banks will have to divest certain fund operations.

RESCHEDULED for Tuesday, October 25, 2011

12:45 – 2:00 PM ET

Speakers: Harvey Eisenberg, Derrick Cephas, and Heath Tarbert

Since its passage in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act — and more specifically, Section 619 and its implementing rules — has worried financial industry executives and their legal advisers because of the potential impact on proprietary trading operations, merchant banking arms, and fund management teams embedded inside of large banks.

An interdisciplinary panel covering private equity fund formation, M&A, and financial institutions regulatory will address [click to continue…]

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act) was enacted one year ago. At that time, it was heralded as perhaps the most dramatic set of regulatory reforms since the 1930s. The Act was expected to have significant effects in both the short and long term. Dodd-Frank’s provisions, however, are not confined to the US market. The Act is intended to have significant implications for non-US companies doing business in the United States or whose securities are listed on a US stock exchange. What is more, the Act purports to regulate certain transactions and entities with little direct connection to the United States.