Financial Institutions Regulatory partner Douglas Landy recently commented in the Institutional Investor article, “Fed’s Proposed Volcker Rule Changes May Benefit VC Firms.” The article discusses how the Federal Reserve Board’s proposed changes to the Volcker Rule opens up the possibility of banks investing in venture capital firms as limited partners, which would free them from regulation that prohibited them from contributing their own capital to VC funds. Currently, the Volcker Rule counts venture capital funds amongst private equity firms and hedge funds subject to regulation. The Fed is open to public comment before finalizing the changes, and they have included questions on whether the rule’s exclusion of banks from investing into US venture capital funds should be revised. Mr. Landy commented, “The release asks almost 400 questions in total,” and “Many of them relate to covered fund side.” As far as when actual changes could be made to the Volcker Rule, Mr. Landy notes that it could take some time, saying, “the comment period will likely be extended to 90 or even 120 days, to account for people being away over the summer.”
