On December 10, 2013, the Federal Reserve, FDIC, OCC, SEC, and CFTC (the “Agencies”) issued the long-awaited final rule (“Final Rule”) construing the Volcker Rule. The Volcker Rule generally prohibits banking entities — a broad term that includes banks, bank holding companies, foreign banks treated as bank holding companies, and their respective affiliates — from (i) engaging in proprietary trading and (ii) acquiring or retaining ownership interests in, or acting as sponsors to, certain hedge funds and private equity funds (“covered funds”). The Final Rule makes significant changes from the Proposed Rule that was published in the Federal Register on November 7, 2011 (“Proposed Rule”), in response to the large number of comments received on the Proposed Rule.

The purpose of this Client Alert is to summarize certain impacts of the Final Rule on foreign banking organizations (“FBOs”) — in other words, foreign banks that own U.S. banks or Edge Corporations or operate branches or agencies in the United States, and companies that control such foreign banks. In other Client Alerts and Bulletins, we shall address other aspects of the Final Rule.