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Monday, December 12, 2011

Without Rewrites, Volcker Rule Bites

News summary by MFWire's editors

The Volcker Rule isn't supposed to target U.S. mutual funds, and yet it could be encouraging financial firms to divest from asset managers. That's a possibility pondered in Financial News. The article notes that, thanks to the broad definition of what's covered under the new reg, many other asset management products besides mutual funds may start counting as much riskier, nudging at least some asset management divestments.

"The point of the Volcker Rule is that banks shouldn't be running big hedge funds using taxpayers' money. But the definition of the funds covered by these proposals is so broad, it's like a giant vacuum cleaner sucking up everything around it," BlackRock [profile] co-founder and government relations chief Barbara Novick told Financial News. "U.S. mutual funds are exempt, but if you're a global company offering funds in other jurisdictions, some of your funds might not be U.S. mutual funds. The proposals would be capturing an awful lot that is not what the Volcker Rule was intended to catch."

A spokeswoman for Deutsche Bank told the Financial News that the recently revealed "strategic review" of DWS [profile] and the rest of Deutsche's non-Europe and non-Asia asset management business "was triggered by changing conditions in the asset management industry, partly the recent regulatory changes."

On November 22 Deutsche officially unveiled that review [see MFWire.com, 11/22/2011, 11/23/2011, 11/28/2011, 12/1/2011 and 12/2/2011].

While the article makes no mention of other firms by name, Societe Generale is another major European bank with a U.S. mutual fund business that appears to be on the shopping block. Bloomberg, the Los Angeles Times and MFWire.com all reported recently on the possibility of Societe Generale selling Trust Company of the West (TCW [profile]), [see MFWire.com, 11/30/2011 and 12/1/2011].

SocGen officials insist that "TCW is not for sale."

DLA Piper partner Jeffrey Hare, ICIGlobal, HSBS Holdings spokesman Neal McGarity, Natixis [profile] general counsel Jeff Plunkett and Dechert partner David Vaughan all offered their input to Financial News. 

Edited by: Neil Anderson, Managing Editor


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