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Komfie Manalo, Opalesque Asia: Several government agencies, including the Commodity Futures Trading Commission,
Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve
System, Office of the Comptroller of the Currency, and Securities and Exchange
Commission have issued a new FAQ on the Dodd-Frank Wall Street Reform and Consumer
Protection Act, which is commonly referred to as the "Volcker Rule."
In an alert to its clients, international law firm Schulte Roth & Zabel
said that the new FAQ now makes clear that the Volcker Rule does not necessarily
prohibit non-U.S. banking entities from investing in third-party managed hedge funds
and private equity funds, even where the ownership interests of such funds are
marketed and sold to U.S. investors.
The Volcker Rule contains an exemption that permits eligible non-U.S. banking
entities to hold ownership interests in "covered funds," so long as such activity
occurs "solely outside the United States" (SOTUS). This exemption, commonly known as
the "SOTUS exemption" requires, among other conditions, that "no ownership interest
in the covered fund is offered for sale or sold to a resident of the United
States."
"However, the FAQ makes clear that this requirement does not prevent a third-party
manager from offering or selling the fund’s interests to U.S. investors,...................... To view our full article Click here
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