Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The staff of the SEC’s Divisions of Trading and Markets, Investment Management, and Corporation Finance have updated guidance on the SEC’s final rule implementing section 13 of the Bank Holding Company Act of 1956 (“BHC Act”), commonly referred to as the Volcker Rule.

In the new FAQs the staff advises a banking entity is not required to deduct from its tier 1 capital an investment in a Qualifying TruPS CDO retained pursuant to § 255.16(a) of the interim final rule. In January 2014, regulators adopted an interim final rule to add § 255.16 to the final rules implementing section 13 of the BHC Act. Section 16(a) of the interim final rule permitted banking entities to retain an interest in, or act as sponsor (including as trustee), of an issuer of collateralized debt obligations backed by trust preferred securities (“TruPS CDOs”), so long as:

  • the issuer was established, and the interest was issued, before May 19, 2010;
  • the banking entity reasonably believes that the offering proceeds received by the issuer were invested primarily in Qualifying TruPS Collateral; and
  • the banking entity’s interest in the vehicle was acquired on or before December 10, 2013 (or acquired in connection with a merger or acquisition of a banking entity that acquired the interest on or before December 10, 2013).


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