Dodd-Frank Update: PEGCC Files Comment Letter on the Volcker Rule
On February 13, 2012, the PEGCC filed comments on proposed regulations implementing the Volcker Rule. Although the PEGCC’s members are not themselves directly subject to the Volcker Rule, the provision will limit the ability of private equity firms to raise capital from banks and certain other investors. The PEGCC believes that the proposed regulations appropriately implement certain aspects of the Volcker Rule, particularly with respect to the following: (1) The exclusion of customer funds from the definition of “banking entity”; (2) The interpretation that qualified pension plans for banking entity employees are not subject to the covered fund investment prohibitions of the Volcker Rule; and (3) The permission of U.S. private equity firms to sponsor (that is, to manage, organize or advise) covered funds that are offered only to non-U.S. banks and certain other non-U.S. persons and entities.
However, the PEGCC comment letter also emphasizes that the final Volcker Rule regulations should continue to allow investment by the following persons and entities in private equity funds that are not sponsored by banking entities: (1) Insurance companies through general accounts and separate accounts; (2) Banking entity employees and employee vehicles (including pension plans); (3) Other covered funds in which banking entities are permitted to invest; and (4) Non-U.S. banking entities.
“Private equity firms do not pose systemic risk and whatever limitations the Volcker Rule may place on those who can invest in PE going forward, we want to ensure that those limitations do not go any further than the law intended,” said PEGCC President and CEO, Steve Judge. “We hope that our comment letter will help provide additional clarity and appropriate scope to the Volcker Rule. The PEGCC has actively engaged on the Volcker Rule at every step in the process with the hope that our engagement will help regulators craft appropriate protections.
For more information and to read the PEGCC’s full comment letter on the topic, please click here.
