Tuesday, October 11, 2011

House Democrats Decry Exceptions to Volcker Ban on Proprietary Trading in Leaked Draft

In a letter to the SEC and banking agencies implementing the Volcker Rule in Section 619 of the Dodd-Frank Act, prominent House Democrats decried the broad exceptions from the ban on proprietary trading in the leaked draft proposal of the implementing regulations. The proposed regulations on proprietary trading are significantly weaker than what Congress intended in Section 619, said the lawmakers, which is clearly intended to prohibit proprietary trading by financial institutions to limit risk and protect shareholders. Press reports on the draft indicate that the proposal allows banks to continue engaging in excessive risk taking activities. The House Democrats urged the regulators to adopt final regulations with a ban on proprietary trading that is strong and clear, with narrowly defined exceptions.