Under guidance issued on July 16, 2015 by the federal agencies responsible for implementing the Volcker Rule (the “Agencies”) RICs and FPFs need not be treated as banking entities during a seeding period of up to three years.

The Volcker Rule restricts “banking entities” from sponsoring or investing in covered funds. Registered investment companies (RICs) and foreign public funds (FPFs) are not “covered funds” as defined in the Volcker Rule.1 However, while they are being organized and “seeded” with capital, investment funds generally are privately held—and in the case of RICs are not registered—and do not qualify as RICs or FPFs, thus creating an issue as to whether the banking entities may seed them.