The Volcker Rule “Covered Funds” Rule: Eight Things to Know

On June 25, 2020, five federal financial regulators jointly issued a final rule that modifies existing regulations implementing the Volcker Rule’s general prohibition on banking entities investing in, sponsoring, or having certain relationships with hedge funds or private equity funds (collectively, “covered funds”). The substance of the final rule is largely unchanged from the underlying proposed rulemaking issued in January 2020. The final rule, which follows a 2019 final rule revising the Volcker Rule’s proprietary trading provisions, is intended to simplify the covered fund provisions and permit banking entities to engage in additional fund-related activities that do not present the risks that the Volcker Rule was intended to address.