Legal Alert: Final Volcker Rule: Update and Key Takeaways

by Eversheds Sutherland (US) LLP
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On December 10, 2013, the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC, and collectively, the Agencies) issued the final rule (Final Rule) implementing the “Volcker Rule” requirements of section 13 (section 13) of the Bank Holding Company Act (BHC Act), which were added by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Final Rule will, as anticipated, significantly affect the trading and private fund investment activities of banks and their affiliates, and will also significantly impact their customers, including private funds, insurers, and energy and commodity traders. Shortly after the Final Rule’s release, the American Bankers Association (ABA) on December 24, 2013, brought an action against the FRB, the OCC and the FDIC that sought to void one of the Final Rule’s provisions and, in a related development, Rep. Jeb Hensarling is reportedly planning to introduce a bill that would amend the Volcker Rule (see Section II.B. below). The Final Rule is effective April 1, 2014, and banking entities generally have until July 21, 2015, to conform their activities and investments to the Final Rule. Banking entities with $50 billion or more in trading assets and liabilities must, however, begin reporting quantitative metrics on June 30, 2014.

The main parts of the Final Rule are as follows:

  • Proprietary Trading Restriction: The Final Rule imposes (i) limitations on short-term proprietary trading (Proprietary Trading Restriction) of financial instruments by any banking entity, and (ii) reporting obligations on banking entities with significant trading operations designed to assist the Agencies in identifying prohibited proprietary trading. Subject to limited exceptions, “Banking entity” means (i) an insured depository institution, (ii) any foreign bank operating a branch or agency in the U.S., and (iii) any affiliate of (i) or (ii). An affiliate is defined as any company that controls, is controlled by, or is under common control with another company1 and includes non-bank affiliates such as insurers and finance companies.
  • Ownership Restriction and Relationship Restrictions: The Final Rule limits or prohibits a banking entity from sponsoring or having an ownership interest (Ownership Restriction) in, or certain relationships (Relationship Restrictions) with, private funds meeting the definition of “covered fund.”
  • Regulatory Capital: The Final Rule requires a banking entity to deduct the greater of 1) historical cost, plus earnings, and 2) fair market value of all qualifying de minimis covered fund investments made by the entity from the entity’s tier 1 capital.
  • Compliance Program: Banking entities are required to establish an internal compliance program designed to help ensure and monitor compliance with the prohibitions and restrictions of section 13 and the Final Rule. The CEO of a banking entity subject to enhanced compliance program requirements must annually attest in writing to the relevant agency that the entity has in place a compliance program reasonably designed to achieve compliance with section 13 and the Final Rule.

Key Takeaways:

  • Banking entities with significant trading activities will be subject to granular reporting and enhanced compliance policies, procedures and controls, and those responsible for implementing the internal framework will have heightened responsibilities.
  • The Final Rule provides an opportunity for prudential supervisors to challenge trading decisions with the benefit of hindsight. Banks with significant trading activities may need to walk a fine line of implementing policies and procedures that aim to protect the bank from regulatory skirmishes without inhibiting a trading desk from conducting bona fide market making or hedging activities.
  • Since banking entities generally may not own covered funds and the definition of covered funds includes an “ownership interest” in a variety of non-loan securitizations, many banks will need to determine, based on a security-by-security review of underlying documentation, whether they may have an “ownership interest” in covered funds; where they own such covered funds, banks entity investors are required either to restructure the investment or divest.
  • Private fund managers may for some fixed income and alternative strategies consider using a closed-end fund registered under the Investment Company Act of 1940 (1940 Act) if it is important for them to attract seed money or significant investments by U.S. financial holding companies or other banks.
  • Instead of investing via a covered fund subject to the Final Rule’s restrictions, some banking entity sponsors of covered funds may in some cases look to use registered funds as collective investment vehicles; the use of business development companies (BDCs) is one example.
  • Instead of investing via a covered fund subject to the Final Rule’s restrictions, banking entity sponsors are incentivized to make direct investments in portfolio companies where they are permitted under the BHC Act’s merchant banking authority. It is expected that further regulatory guidance will be sought from the Agencies on the question of permissible parallel investments.
  • Banking entities are permitted to enter into qualifying joint ventures with 10 or fewer unaffiliated co-venturers.2
  • The broad definition of covered funds may negatively affect the liquidity of a variety of pre-Volcker securitizations, which could result in investment opportunities for real-money buyers such as insurers.3
  • Collateralized Loan Obligations (CLOs), consumer asset-backed securities (ABS) and loan-based securitization structures will continue to be the focus of U.S. banking entities’ securitization activities.
  • The Final Rule may result in further standardization of securitization issuances, since wherever possible bank underwriters will prefer to distribute ABS that are not covered funds and hence qualify for investment by banking entities.

Part I of this memo will focus on the Final Rule’s Proprietary Trading Restriction; Part II on the Ownership Restriction, including a description of the ABA lawsuit; Part III on the Relationship Restrictions and Other Restrictions; and Part IV on the reporting and compliance program requirements.

I. Proprietary Trading Restriction

Subject to the exemptions and permitted activities described below, a banking entity may not engage as principal for the trading account in any purchase or sale of “financial instruments,” meaning

1) a security,
2) a commodity futures contract, or
3) derivatives, including swaps, security-based swaps, foreign exchange swaps and forwards4, and physically settled commodity forwards; and
4) any option on 1), 2) or 3).

       A. Trading Account Activity

Any purchase or sale of a financial instrument is “trading account” activity covered by the Proprietary Trading Restriction if it meets a “short-term purpose test,” i.e., is principally for the purpose of short-term (i) resale, (ii) price movements, (iii) arbitrage profits, or hedging positions resulting from these activities.

The purchase or sale of a financial instrument by a banking entity is presumed to be for the trading account if the banking entity holds the position for 60 days or less, unless the entity can demonstrate that the purchase or sale does not meet the short-term purpose test. The Agencies declined to provide a reverse presumption, in recognition that some proprietary trading could occur outside of the 60-day period.5

Trading activity is deemed to be “trading account” activity covered by the Proprietary Trading Restriction in two cases:

  • if a banking entity purchases or sells one or more financial instruments that are both market risk capital rule covered positions and trading positions (or hedges of such market risk capital rule positions),6 or
  • if a banking entity is a dealer, a swap dealer or a security-based swap dealer and purchases or sells a financial instrument in connection with its swap dealer business (dealer activities), whether inside or outside the U.S.Underlying the Agencies’ treatment of dealer activities is the assumption that financial instruments bought or sold by dealers are generally held with short-term intent.8

       B. Excluded Trading Activity

Spot foreign exchange and spot physical commodities transactions are excluded from the Proprietary Trading Restriction. In addition, other trading activity is not subject to the Proprietary Trading Restriction, namely, the purchase or sale of a financial instrument:

  • solely as broker, agent, or custodian,
  • under certain repurchase or reverse repurchase and securities lending agreements,
  • for bona fide liquidity management purposes,
  • by certain derivatives clearing organizations (DCOs) or clearing agencies in connection with clearing activities,
  • by a member of a clearing agency, DCO, or designated financial market utility engaged in excluded clearing activities,
  • to satisfy existing delivery obligations,
  • to satisfy an obligation of the banking entity in connection with a judicial, administrative, self-regulatory organization, or arbitration proceeding,
  • through a deferred compensation or similar plan or
  • to satisfy a debt previously contracted.9

        C. Exempt Activities

The Final Rule exempts certain underwriting, market making, risk-mitigating hedging activities, and certain other proprietary trading activities.

1. Underwriting and Market Making Activities

The Final Rule exempts:

  • the purchase or sale of securities and certain other instruments in connection with “underwriting activities,”10 to the extent that such activities are designed not to exceed the reasonably expected near-term demands of clients, customers, or counterparties; and
  • market making activities11 meeting the following requirements:
    • the trading desk that manages a financial exposure routinely stands ready to purchase and sell one or more types of financial instruments related to its financial exposure for its own account, in commercially reasonable amounts and throughout market cycles;
    • the amount, types, and risks of the financial instruments in the trading desk’s market-maker inventory are designed not to exceed the reasonably expected near-term demands of clients, customers, or counterparties, and for this purpose other large dealers may be considered customers only in limited circumstances; and
    • to the extent that any identified limit is exceeded, the trading desk takes action to bring the trading desk into compliance with the limits as promptly as possible after the limit is exceeded.

If the “reasonably expected near-term demands of clients or counterparties” do not materialize, the desk may be exposed to heightened regulatory scrutiny in the event of an unusual gain or loss.

The Final Rule makes clear that a trading desk will not qualify for the market-making exemption if it is wholly or principally engaged in arbitrage trading.12

The exemptions for underwriting and market making activities are, moreover, available only if:

  • the banking entity maintains and enforces an internal compliance program that is reasonably designed to ensure its compliance with the underwriting or market-making exemption, as the case may be;
  • the compensation arrangements of persons performing underwriting- or market-making-related activities, as the case may be, are designed not to reward or incentivize prohibited proprietary trading; and
  • the banking entity is licensed or registered to engage in underwriting- or market-making-related activities in accordance with applicable law.13

2. Risk Mitigating Hedging Activities14

Risk mitigating hedging activities designed to reduce the specific risks to a banking entity related to positions or holdings are permitted if:

  • the banking entity implements and enforces an internal compliance program reasonably designed to ensure compliance with the Final Rule’s requirements, including a correlation analysis demonstrating that the hedging activity demonstrably reduces or otherwise significantly mitigates the identifiable risks being hedged;
  • the activity is conducted in accordance with the written policies and procedures, is designed to reduce or otherwise significantly mitigate, and demonstrably reduces or significantly mitigates one or more identifiable risks related to identified positions, and does not give rise to any significant new risk that is not itself hedged contemporaneously; and
  • the compensation arrangements of persons performing risk mitigating hedging activities are designed not to reward or incentivize proprietary trading.

In addition, there is a specific documentation requirement with respect to certain risk mitigating hedging activities, including those not established by the specific trading desk responsible for the underlying positions.

3. Other Permitted Proprietary Trading15

The Final Rule permits a banking entity to engage in trading in certain government obligations, trading on behalf of customers, trading by insurance companies, and trading outside of the U.S. by certain foreign banking entities. However, a banking entity is prohibited from relying on any exemption to the Proprietary Trading Restriction if the permitted activity would involve or result in a material conflict of interest, result in a material exposure to high-risk assets or high-risk trading strategies, or pose a threat to the safety and soundness of the banking entity or to U.S. financial stability.16

II. Ownership Restriction

Subject to certain exceptions, a banking entity generally may not sponsor, or as principal acquire or retain any ownership interest in, covered funds.17  Non-qualifying ABS—i.e., ABS that are “covered funds”—may include certain

  • CLOs and collateralized debt obligations (CDOs),
  • pass-through real estate investment trusts (REITs),
  • interests in cash collateral pools,
  • tender option bonds,
  • venture capital funds,
  • credit funds or
  • securities of certain legacy special purpose entities.

A. Key Definitions: Ownership Interest and Covered Fund

An “ownership interest”  means an “equity, partnership, or other similar interest.” For this purpose, “other similar interest” is defined more broadly in the Final Rule than it was in the notice of proposed rulemaking19  (NPR) and includes, in addition to interests typically associated with a holder of equity, any interest that:

  • has the right to participate in the selection or removal of a general partner, managing member, member of the board, investment manager, investment adviser, or commodity trading advisor of the covered fund; or
  • has the right to receive a share of the income of the covered fund; or
  • provides that the amounts payable by the covered fund with respect to such interest could be reduced based on losses arising from the underlying assets.

A “covered fund20 generally includes:

  • an issuer that would be an investment company under the Investment Company Act of 1940 but for exemptions under sections 3(c)(1) or 3(c)(7) of that Act (hereinafter referred to as a “section 3(c)(1) or (7) issuer”). These exemptions are generally available to privately offered companies whose securities are beneficially owned by 100 or fewer persons or owned exclusively by qualified purchasers;
  • a commodity pool
    • that is an “exempt pool” under CFTC Rule 4.7, i.e., a pool whose participation units are sold in certain unregistered offerings and whose units are offered only to qualified eligible persons (investors meeting certain heightened qualification standards); or
    • whose operator is registered with the CFTC as a commodity pool operator, if qualified eligible persons own substantially all of the pool’s participation units and such units have not been publicly offered to persons who are not qualified eligible persons under 17 CFR §§ 4.7(a)(2) and (3); and
  • a foreign fund,21 which is a term that applies only to a U.S. banking entity (including the U.S. branch, agency, or subsidiary of a foreign banking organization) and means any fund that

(A) is offered and sold outside the U.S.,
(B) is not a foreign public fund,
(C) raises money primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities, and
(D) is sponsored or owned by such banking entity.

B. ABA Lawsuit and House Bill

The broad definitions of “ownership interest” and “covered fund” result in debt-like interests in certain non-loan securitizations being covered by the Final Rule’s Ownership Restriction. This is problematic for some small banks that are apparently significant buyers of Collateralized Debt Obligations backed by Trust Preferred Securities (TruPS CDOs), a securitization of trust-preferred securities that some of these banks have classified as hold-to-maturity and carry at amortized cost, which now exceeds their fair value. The potential consequence of the Ownership Restriction is the realization of an accounting loss that would hit both earnings and regulatory capital.

This potential consequence was first reported on December 16, 2013, when Zions Bancorp disclosed that it would have to sell TruPS CDOs and take a $387 million charge to write down the value of the securities. After reclassifying the CDOs from hold-to-maturity to available-for-sale, Zions estimated that its tier 1 common equity ratio would fall from 10.47% to 9.74%.22

In response to inquiries from members of Congress regarding potentially similarly situated community banks, the FRB responded with a FAQ  on December 19 reminding banks that an issuer than can rely on a 1940 Act exemption other than sections 3(c)(1) or 3(c)(7) would not be a covered fund and indicating that

  • a banking entity should evaluate if a security issued by a TruPS CDO is an ownership interest as defined under the Final Rule,
  • if the CDO issuer is not a covered fund at the end of the conformance period, the banking entity would not need to divest its CDO holdings, and
  • to the extent that a banking entity initiates actions to conform its interests in the CDO to the Final Rule, the banking agencies would expect the entity to develop a conformance plan that is appropriately specific.

Unassuaged by the FRB’s FAQ, and apparently concerned by the prospect that some small banks could potentially suffer significant capital hits as a result of their TruPS CDO holdings, the ABA and four banks on December 24, 2013, brought an action against the FRB, the OCC and the FDIC, requesting a temporary restraining order and an injunction that would void the definition of the term “other similar interest.” In response, the Agencies (excluding the CFTC) issued a joint statement on December 27, 2013, indicating that they were evaluating if it was “appropriate not to cover pooling vehicles that invest in TruPS in order to eliminate restrictions that might otherwise have consequences that are inconsistent with the relief Congress intended to provide community banking organizations under section 171(b)(4)(C) of the Dodd-Frank Act.”24 The ABA then reportedly dropped its request for a temporary restraining order, but did not withdraw its lawsuit.25

On January 2, 2014, the Loan Syndications and Trading Association reportedly asked federal regulators to confirm by January 15, 2014, that the right to remove a manager in breach of obligations would not result in an “ownership interest” in CLOs.26

House Financial Services Committee Chairman Jeb Hensarling is reportedly planning to introduce a bill that would remove any obstacle to banking entities’ owning TruPS CDOs. The amendment of the Volcker Rule may reportedly also create a loophole that would allow banking entities to own a wide variety of ABS, so long as the ABS pool includes at least one qualifying TruPS CDO security, instead of the limited range of qualifying ABS described in Section II.E.2. below.27

Lesson Learned From the ABA Lawsuit

Because the key terms “ownership interest” and “covered fund” are broadly defined, and covered funds include a variety of non-loan securitizations, a bank may need to determine, based on a security-by-security review of underlying documentation, if it has an “ownership interest” in covered funds; if so, the bank would need to initiate actions to conform its interest to the Final Rule.

C. Qualifying De Minimis Investments

A banking entity may sponsor a covered fund and (together with affiliates) retain an ownership interest, subject to a single fund limit of 3% (3% fund limit) of the ownership interests of the fund (or such greater amount – typically 5% – as is required by the credit risk retention rules implementing section 15G of the Securities Exchange Act of 1934), so long as

  • the banking entity organizes and offers the covered fund in connection with the provision of bona fide trust, fiduciary, investment advisory or commodity trading advisory services, or the banking entity organizes and offers a covered fund that is an ABS issuer,
  • the total amount of the covered fund investments held by such entity and its affiliates is not greater than 3% of the entity’s tier 1 capital, and
  • the banking entity complies with Super 23A and other applicable requirements.28

The Final Rule requires a banking entity to deduct the greater of 1) historical cost, plus earnings, and 2) fair market value of all qualifying de minimis covered fund investments made by the entity from the entity’s tier 1 capital. The banking agencies recognize that the final Basel III  rules impose risk weights and deductions that do not correspond to the deduction for covered fund investments imposed by the Final Rule. The banking agencies intend to review the interaction between the requirements of the Final Rule and the Basel III29 rules, and expect to propose “steps to reconcile the two rules.”30

D. Qualifying Joint Ventures

A U.S. banking entity may enter into a joint venture with 10 or fewer unaffiliated co-venturers, provided that the venture:

  • engages in activities that are permissible for the entity, other than investing in securities for resale or other disposition; and
  • is not, and does not hold itself out as being, an entity that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities.

The exemption for joint venture interests in the proposed Volcker rule had been limited to interests in “operating companies;”31 the above exemption is not so limited. For example, it would appear that under the Final Rule a banking entity may participate in a Qualifying Joint Venture regarding commodity interests so long as the venture’s activities are permissible for the banking entity.

E. Certain Permissible Bank Investments

    1. Registered Investment Companies, Including BDCs.

To originate ABS that qualify for investment by U.S. banking entities, a bank may structure a transaction in which the issuer:

  • relies on a 1940 Act exemption other than section 3(c)(1) or section 3(c)(7), e.g., section 3(c)(5) (for securitizations of accounts receivable, mortgages, and certain other asset types), or
  • registers under the 1940 Act (registered company).

The Final Rule does not:

  • restrict a banking entity’s ability to invest in and sponsor registered companies, including BDCs; or
  • apply to the holdings of BDCs or other registered companies in which a banking entity invests, so long as the relevant registered company is not itself an “affiliate” of the banking entity investor.

Accordingly, so long as the bank holding company does not directly or indirectly control the registered company under the BHC Act, a bank holding company may generally invest in a BDC or other registered company without being subject to the Ownership Restriction or the Relationship Restrictions or, with respect to portfolio companies, the Proprietary Trading Restriction.32

Also, a seeding vehicle that will become a BDC or other registered investment company would not itself be viewed as violating the requirements of the Final Rule during the seeding period so long as the banking entity that establishes the seeding vehicle operates the vehicle pursuant to a written plan, developed in accordance with the banking entity’s compliance program, that reflects the banking entity’s determination that the vehicle will become a BDC or other registered investment company within the time period provided for seeding a covered fund under the Final Rule.

Because of these provisions of the Final Rule,

  • additional financial holding companies with asset management businesses may organize BDCs as vehicles for making debt and equity investments in BDC-eligible portfolio companies, and
  • private fund managers may for some fixed income and alternative strategies use a closed-end fund registered under the 1940 Act if it is important for them to attract seed money or significant investments by financial holding companies or other banks.

    2. Qualifying ABS.

A banking entity may own a defined range of ABS, whose issuers are not “covered funds” even if issued or guaranteed by section 3(c)(1) or (7) issuers, such as:

  • qualifying loan securitizations,
  • qualifying Asset-Backed Commercial Paper (ABCP) issuances,
  • qualifying covered bonds, and
  • separate account bank-owned life insurance (BOLI).

The Final Rule may result in further standardization of securitization issuances, since a bank will prefer to distribute ABS that qualify for investment by banks without being subject to the Final Rule’s Ownership or Relationship Restrictions. Issuers of non-qualifying ABS will presumably need to pay a premium to compensate for the less liquid nature of such securities vis-a-vis qualifying ABS.

a. Qualifying Loan Securitizations. The only “permissible securitization assets” that may be held by a qualifying loan securitization are:

  • loans, including residential mortgages, commercial mortgages, student loans, credit card receivables, auto loans, auto leases and equipment leases,
  • servicing or certain other rights incidental to holding the loans,
  • cash equivalents, including certain high quality, highly liquid short-term securities,
  • qualifying rate or currency derivatives, and
  • certain special units of beneficial interest or collateral certificates.33

The Agencies also indicated that “esoteric asset classes supported by loans may also be able to rely on the loan securitization exclusion, such as time share loans, container leases, and servicer advances.”34

b. Qualifying ABCP. Qualifying ABCP are securities that comprise only a residual interest and ABCP having a maximum term of 397 days, whose cash flows are  supported:

  • by no assets other than permissible securitization assets and certain asset-backed securities supported by loans that were issued or initially sold to such issuer, and
  • by a liquidity facility that provides 100% liquidity coverage from a regulated liquidity provider.

c. Qualifying Covered Bonds. Qualifying covered bonds are certain securities, whose cover pool comprises only permissible securitization assets. Because many cover pools contain residential mortgage-backed securities or other assets that are not permissible securitization assets, the Agencies acknowledged that the exclusion from the definition of covered fund that the Final Rule provides for covered bonds may not be available to many of the existing cover pools that support outstanding covered bonds.

d. Separate Account BOLI. A banking entity may invest in separate account BOLI, provided that no banking entity that purchases the policy controls the investment decisions regarding the underlying separate account assets or participates in the profits and losses of the separate account other than in compliance with applicable supervisory guidance.

F. Exemptions for Banking Entities that Are Insurance Companies

If a banking entity is a regulated insurer, the Final Rule provides an exemption35 for proprietary trading activity in the general account or in a separate account36 of the insurer, provided:

  • the insurer (or an affiliate) purchases or sells financial instruments solely for the insurer’s general account or a separate account established by the insurer,
  • the purchase and sale is conducted in compliance with, and subject to, the insurance company investment laws and regulations of the State or jurisdiction in which such insurance company is domiciled (collectively, “insurance regulation”); and
  • the appropriate Federal banking agencies (after consultation with the Financial Stability Oversight Counsel (FSOC) and relevant State insurance commissioners) have not jointly determined that a particular insurance regulation is insufficient to protect the safety and soundness of the banking entity, or the financial stability of the United States.

In addition, if a banking entity is a regulated insurer, the Final Rule37 provides an exemption38 permitting such insurer (or affiliate) to sponsor, or to acquire and retain an ownership interest in, covered funds, provided:

  • the insurer (or affiliate) acquires and retains the ownership interest solely for the insurer’s general account or one or more of its separate accounts,
  • the acquisition and retention of the ownership interest is conducted in compliance with, and subject to, insurance regulation, and
  • the appropriate Federal banking agencies (after consultation with the FSOC and relevant State insurance commissioners) have not jointly determined that a particular insurance regulation is insufficient to protect the safety and soundness of the banking entity, or the financial stability of the United States.

The exemptions that a regulated insurer enjoys from the Final Rule’s restrictions are subject to general limitations that prohibit a permitted activity if it would result in a material conflict of interest between the insurer and its clients or counterparties or in a material exposure to high-risk assets or high-risk trading strategies.39  

The Final Rule also provides exemptions that allow insurers that are banking entities to sponsor, and banking entities to invest in, BOLI and corporate owned life insurance (COLI) separate accounts (e.g, separate accounts that rely on a section 3(c)(1) or section 3(c)(7) exemption from the 1940 Act in private placements of life insurance). Specifically, the Final Rule provides that generally a “covered fund” does not include separate accounts so long as either:

  • no banking entity other than the insurance company that establishes the separate account participates in the account’s profits and losses or
  • the separate account is used solely for the purpose of allowing one or more banking entities to purchase qualifying BOLI.40

The Agencies “expect [banking entities that are] insurance companies to have appropriate compliance programs in place for any activities subject to section 13.”41

If a regulated insurer is a banking entity with significant trading activities, and the insurer’s activities are limited to permitted activities, then the banking entity may, but is not required to, meet the reporting requirement with respect to trading metrics.42

Under section 13, nonbank financial companies designated by the FSOC as systemically important financial institutions (SIFIs) that engage in proprietary trading activities or make investments in covered funds may be subject to additional capital requirements and quantitative limits by the appropriate Agency or Agencies. The Agencies noted that two of the three companies currently designated by FSOC for supervision by the FRB are affiliated with insured depository institutions (American International Group, Inc. and General Electric Capital Corporation, Inc.) and are therefore currently banking entities for purposes of section 13. Interestingly, the FRB staff indicated that it “is exploring whether the third entity [i.e., Prudential Financial, Inc. (PFI)] engages in any activity that would be subject to section 13 of the BHC Act, and will propose action consistent with that section if appropriate and applicable.”43 The fact that the Agencies refrained, at least preliminarily, from applying to PFI capital requirements with respect to its proprietary trading and investments in covered funds suggests that, for purposes of the Volcker Rule’s capital requirements, the Agencies are considering treating SIFIs that are not banking entities differently from SIFIs that are banking entities.

G. Private Funds: Parallel Investments, Master/Feeder Funds, and Fund of Funds

If a banking entity sponsor’s investment in a hedge fund or private equity fund currently is greater than the 3% fund limit, the entity will seek to bring its investment into compliance with the 3% fund limit by the end of the conformance period. To do so, the banking entity may seek to restructure its investment.

If a banking entity makes a parallel direct investment (for example under its merchant banking authority) in one or more companies in which a fund organized and offered by the banking entity also invests, the direct investment would not, in some circumstances, count against the 3% fund limit. In the Final Rule, the banking agencies did not draw a clear line between the direct investments that will, and those that will not, count against the 3% fund limit, but did set out some limits with respect to co-investment.

Where, for example, a banking entity sponsors a covered fund and a covered fund’s investment manager determines that the covered fund does not have sufficient capital, or it would not be suitable for the covered fund, to make the entire investment in a portfolio company, the banking entity should not itself make any side by side privately negotiated co-investment with the covered fund, unless the value of such co-investment is less than 3% of the value of the total amount co-invested by others in such investment.  And if a banking entity sponsor makes investments side by side in substantially the same positions as a covered fund, then the value of such investments should be included for purposes of determining the value of the banking entity’s investment in the covered fund.

The Final Rule also clarifies how a banking entity is to apply the 3% fund limit in the case of master-feeder and fund-of-funds structures that a banking entity organizes and offers.

In the case of master-feeder structures, the 3% fund limit will apply not to the feeder but only to the master fund; and the investment in the master fund will include:

  • any direct investment in the master fund, and
  • a pro-rata share of any ownership interest in the master fund that is held indirectly through the feeder fund.

Likewise, for fund-of-funds investments, the banking entity’s permitted investment in the underlying fund will include:

  • any direct investment in such fund, and
  • a pro-rata share of any ownership interest in such fund that is held indirectly through the fund of funds.

A banking entity’s ownership interest in a covered fund excludes the entity’s “restricted profit interest” in the fund.44

III. Relationship Restrictions and Other Restrictions

   A. Super 23A Restrictions.

The Final Rule generally prohibits a banking entity that, directly or indirectly, serves as investment manager, investment adviser, commodity trading advisor, or sponsor to a covered fund, or that organizes and offers a covered fund, or that retains an ownership interest in certain covered funds,45 as well as any affiliate of such banking entity, from entering into a transaction with the covered fund, or with any other covered fund that is controlled by such covered fund, that would be a “covered transaction” as defined in section 23A of the Federal Reserve Act, as if such banking entity were a member bank and the covered fund were an affiliate thereof (Super 23A Restrictions).46  Covered transactions include certain loans and extensions of credit to a covered fund, guarantees of a covered fund’s obligations, or a credit exposure to a covered fund arising from a derivatives transaction.

The Final Rule provides an exception from the Super 23A Restrictions for any prime brokerage transaction with a second-tier covered fund (i.e., a covered fund in which a covered fund managed, sponsored, or advised by such banking entity (or affiliate) has taken an ownership interest) so long as certain conditions are met, including that the CEO (or equivalent officer) of the banking entity certifies in writing that the banking entity does not, directly or indirectly, guarantee or otherwise insure the obligations or performance of the covered fund or of any covered fund in which such covered fund invests.47

   B. Other Limitations on Permitted Covered Fund Activities

No transaction or activity may be deemed permissible under the Final Rule’s provisions concerning organizing, offering, owning, and performing certain other activities with respect to covered funds if the transaction or activity would: (i) involve or result in a material conflict of interest between the banking entity and its clients, customers, or counterparties; (ii) result, directly or indirectly, in a material exposure by the banking entity to a high-risk asset or a high-risk trading strategy; or (iii) pose a threat to the safety and soundness of the banking entity or the financial stability of the United States.48  Material conflicts of interest may be addressed via timely and effective disclosure or information barriers.49

IV. Reporting and Compliance Program Requirements

   A. Reporting Requirements for Banking Entities with Significant Trading Activities

Banking entities with significant trading activities and any other banking entity notified by the relevant Agency must report to its primary supervisory Agency seven quantitative metrics designed to help firms and regulators monitor and identify prohibited proprietary trading and high-risk trading strategies:

  • risk and position limits and usage;
  • risk factor sensitivities;
  • Value-at-Risk and stress VaR;
  • comprehensive profit and loss attribution;
  • inventory turnover;
  • inventory aging; and
  • customer facing trade ratio.50

Banking entities with significant trading activities are:

  • any banking entity that together with its affiliates and subsidiaries has trading assets and liabilities (excluding assets or liabilities involving U.S. Treasuries and Agencies) the average gross sum of which over the previous four calendar quarters is at least equal to:
    • $50 billion beginning on June 30, 2014 (Category 1),
    • $25 billion beginning  on April 30, 2016 (Category 2) and
    • $10 billion beginning on December 31, 2016, (Category 3).51

Banking entities with significant trading activities will be required to begin to report the required quantitative metrics as follows:

  • June 30, 2014, for Category 1 banking entities, which are required to report on a monthly basis;
  • April 30, 2016, for Category 2 banking entities, which are required to report on a quarterly basis; and
  • December 31, 2016,52 for Category 3 banking entities, which are required to report on a quarterly basis.

   B. Compliance Program

Banking entities are required to establish an internal compliance program designed to help ensure and monitor compliance with the prohibitions and restrictions of section 13 and the Final Rule. However, a banking entity that does not engage in proprietary trading activities or make covered fund investments (other than permitted trading activities in domestic government obligations) may satisfy the compliance program requirements prior to commencing such  trading or investing activities.53  A banking entity must establish a compliance program as soon as practicable and in no event later than the end of the conformance period.

1. Banking Entities with $10 Billion or Less in Total Assets

A banking entity with $10 billion or less in total consolidated assets may satisfy the compliance program requirements by including in its existing compliance policies and procedures appropriate references to section 13 and the Final Rule, and adjustments as appropriate given the activities, size, scope and complexity of the banking entity.54

2. Minimum Requirements for Banking Entities with More Than $10 Billion and Less than $50 Billion in Total Assets

For banking entities with more than $10 billion and less than $50 billion in total consolidated assets, the Final Rule specifies six elements that each compliance program must, at a minimum, include. Those elements are:

  • written policies and procedures that establish trading and exposure limits for the activities conducted by the banking entity,
  • internal controls,
  • a management framework that delineates responsibility and accountability for compliance with the Final Rule,
  • independent testing and audit,
  • training, and
  • recordkeeping.

3. Enhanced Requirements for Banking Entities with Significant Trading Activities or with Total Assets of $50 Billion or More

Banking entities with significant trading activities, any banking entity with total consolidated assets of $50 billion or more or, in the case of a foreign banking entity, any entity whose U.S. operations have assets of $50 billion or more, and any other banking entity notified by the relevant Agency must also implement an enhanced compliance program, which must:

  • be reasonably designed to identify, document, monitor, and report the covered activities and investments of the banking entity; identify, monitor, and promptly address the risks of covered activities and investments and potential areas of non-compliance; and prevent activities or investments prohibited by, or that do not comply with, section 13 and the Final Rule;
  • establish and enforce appropriate limits on the covered activities and investments of the banking entity, including limits on the size, scope, complexity, and risks of the individual activities or investments;
  • subject the effectiveness of the compliance program to periodic independent review and testing, and ensure that the entity’s internal audit, corporate compliance, and internal control functions involved in review and testing are effective and independent;
  • make senior management, and others as appropriate, accountable for the effective implementation of the compliance program, and ensure that the board of directors and CEO (or equivalent) of the banking entity review the effectiveness of the compliance program; the CEO must in this connection annually attest in writing to the relevant agency that the entity has in place a compliance program reasonably designed to achieve compliance with section 13 and the Final Rule; and
  • facilitate supervision and examination by the Agencies of the banking entity’s covered trading and covered fund activities and investments.55

The deadline for meeting the enhanced compliance program requirements is July 21, 2015, for Category 1 banking entities; April 30, 2016, for Category 2 banking entities; and December 31, 2016, for Category 3 banking entities.

4. Additional Documentation Regarding Funds

For banking entities with more than $10 billion in total consolidated assets, the compliance program requires additional documentation regarding funds.56                                        

1 Final Rule § __.2(c).
2 See Section II.D.
3 According to a December 31, 2013, Bloomberg News report, Community Bank System Inc. sold collateralized debt obligations (CDOs) and other securities at a loss of about $6.9 million to comply with the Volcker Rule.
4 The Agencies rejected arguments that physically settled commodity forwards were not subject to section 13’s prohibition of proprietary trading.
5 Supplementary Information, p. 47.
6 Final Rule § __.3(b)(ii).
7 Final Rule § __.3(b)(iii).
8 See Supplementary Information, p. 41.
9 Final Rule § __.3(d).
10Final Rule § __.4(a).
11 Final Rule § __.4(b).
12 Supplementary Information, p. 251.
13 Final Rule § __.4(a) and (b).
14 Final Rule § __.5.
15 Final Rule § __.6.
16 Final Rule § __.7.
17 Final Rule § __.10 and § __.11.
18 Final Rule § __.10(d)(6)(i).
19 Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With Hedge Funds and Private Equity Funds, 76 Fed. Reg. 68,846 (Nov. 7, 2011), § __.10(b)(3)(i).
20 Final Rule § __.10(b).
21 Final Rule § __.10(b); § __.10(c)(1).
22 Financial Times, December 17, 2013, p. 13; see also footnote 3 above.
23 FAQ Regarding Collateralized Debt Obligations Backed by Trust Preferred Securities under the Final Volcker Rule (Dec. 19, 2013).
24 Statement regarding Treatment of Certain Collateralized Debt Obligations Backed by Trust Preferred Securities under the Rules implementing section 619 of the Dodd-Frank Act, p. 2. Under section 171, depository institution holding companies must phase out the inclusion of TruPS in their calculation of tier 1 capital, but section 171(b)(4)(C) permanently grandfathered TruPS issued before May 19, 2010, by certain companies with total assets of less than $15 billion.
25 Bloomberg News, December 31, 2013.
26 Bloomberg News, January 2, 2014.
27 New York Times Dealbook, January 7, 2014.
28 Final Rule § __.11.
29 78 FR 62,018, 62,072 (Oct. 11, 2013) (Board/OCC/FDIC Basel III Final Rule): 78 FR 55,340, 55,391 (Sept. 10, 2013) (FDIC Basel III interim final rule).
30 Supplementary Information, p. 698.
31 NPR, § __.14(a)(2)(i)(A).
32 Final Rule § __.12(b) A U.S. financial holding company may, without being deemed to control a registered company for the purpose of the BHC Act, both serve as an investment adviser to a registered investment company and hold less than 25% of such company’s voting shares.
33 See BHC Act § 13(g)(2).
34 Supplementary Information, p. 570.
35 Final Rule § __.6(d).
36 “Separate Account” means an account established and maintained to hold assets that are legally segregated from the insurer’s other assets, under which income, gains, and losses from assets allocated to such account, are credited to or charged against such account without regard to other income, gains, or losses of the insurer. Final Rule § __.2(bb).
37 Final Rule § __.13(c).
38 Final Rule § __.13(c).
39 Final Rule § __.7 and § __.15.
40 Final Rule § __.10(c)(6) and § __.10(c)(7).
41 Supplementary Information, p. 408.
42 See Section IV.A. below.
43 Staff Memo to FRB regarding the draft Final Rule (Dec. 9, 2013), footnote 3.
44 Final Rule § __.10(d)(6)(ii).
45 I.e., ownership interests in ABS of issuers organized and offered under Final Rule § __.11(b).
46 Final Rule § __.14(a).
47 § __.14(a)(2)(ii)(B).
48 § __.15(a).
49 § __.15(b).
50 Final Rule § __.20(d) and Appendix A.
51 In the case of a foreign banking entity, the trading asset and liability thresholds apply to the combined U.S. operations of such entity. Final Rule § __.20(d).(1).
52 Final Rule § __.20(d).
53 Final Rule § __.20(f)(1).
54 Final Rule § __.20(f)(2).
55 Final Rule § __.20(c) and Appendix B.
56 Final Rule § __.20(e).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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