National Law Journal Interviews Manatt Partner on Potential Challenges to New Volker Rule
"Challenges to New Volcker Rule a 'Virtual Certainty'"
The National Law Journal
December 10, 2013 - The National Law Journal interviewed Manatt's Ellen Marshall, a partner in the firm's Financial Services & Banking Practice, on which parts of the new Volcker Rule might be vulnerable to a lawsuit.
As reported by The National Law Journal, the 71-page Volcker Rule was recently released and bars banks from making short-term propriety trades, while exempting certain activities including market-making. The rule also requires new accountability from corporate chiefs. Industry insiders told the publication that it is very likely someone may try to test the entirety of the rule or specific aspects.
Marshall said that lawsuits might take time to ripen.
"Applying these rules will involve line-drawing, such as when a hedge position is considered to be related to a specific asset or liability and when it is merely part of an overall portfolio management strategy," she said. "Or when an investment, though held for longer than 60 days, is not held for investment. These sorts of line-drawing issues are likely to take years to develop."
In the short term, Marshall said, the CEO attestation requirement could prove vulnerable to a challenge. The provision, not included in the original draft, would require bank executives to personally guarantee that their institutions are in compliance with the law. She also flagged the extension of regulation to foreign banks, which could be viewed as "beyond the scope of the statute."
Read the article here.