SEC to Begin Volcker Rule Overhaul Consideration in June (1)

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By Andrew Ramonas

The SEC will vote for the first time on a plan to revamp a Dodd-Frank Act rule that restricts trading by banks and faced opposition on Wall Street June 5.

The Securities and Exchange Commission’s initial vote, if successful, would allow the public to comment on the proposed Volcker Rule overhaul before the agency considers adopting it. The planned changes also need the approval of the Federal Deposit Insurance Corp., Commodity Futures Trading Commission, and other financial regulators to take effect. The Federal Reserve Board will be the first agency to release and take up the proposal May 30.

The open meeting for the vote could be the last chance SEC Chairman Jay Clayton has this year to get the agency to act on the rule, which the commission’s left-leaning members pushed through without Republican support in 2013. Republican Commissioner Michael Piwowar is planning to step down by July 7. His departure will create a 2-2 split between the commission’s left- and right-leaning members. The commission could remain divided for the rest of the year if a replacement for Piwowar isn’t appointed and Democratic Commissioner Kara Stein stays until year’s end, when her term officially runs out.

The Volcker Rule, crafted in response to the 2008 financial crisis, bars banks with U.S. government-backed deposit insurance from using their own money to make speculative market bets and restricts their investments in hedge funds and private equity. Banks have argued the regulation is unclear and too burdensome.

Regulators are expected to put out a plan that would give banks more flexibility with the rule, people familiar with the matter told Bloomberg.

Other Votes

The SEC also will consider matters involving shareholder reports at its meeting, according to a notice posted on the agency’s website May 29.

The commission will vote on whether to adopt a rule that would give mutual funds the option to send electronic copies of annual reports to investors. The SEC will consider issuing releases asking the public to comment on shareholder report delivery processing fees and how to improve the documents, too.

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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