Pub. 3 2013-2014 Issue 5

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S  Relief Approved | continued on page 14 In general, the Volcker Rule prohibits banking entities fromengaging in proprietary trading, acquiring or retaining ownership interest in a hedge fund or private equity fund (“covered funds”) and sponsoring a hedge fund or private equity fund. The final rule contained changes from the 2011 proposal, which would have required banks to divest themselves of Trust Preferred Collateralized Debt Obligations (TruPS CDOs), which are primarily held by community and regional banks. The American Bankers Association quickly filed a legal motion for relief on di- vestiture requirements for these securities. On January 14, 2014, the agencies responded by approving an interim final rule allowing banks to retain interests in TruPS CDOs if the following conditions are met: • The TruPS CDOwas established, and the interest was issued, before May 19, 2010. • The banking entity reasonably be- lieves the offering proceeds received by the TruPS CDO were primarily in- vested in qualifying TruPS collateral. The banking entity’s interest in the TruPS CDO was acquired on or before December 10, 2013. Qualifying TruPS collateral is defined as any trust-preferred security or subordinated debt instrument meeting either of these cri - teria: “Financials: show you the vendor’s financial health. You’ll want these from companies you couldn’t easily replace if they were to go out of business.” FEATURE ARTICLE ANN COUGHLAN BKD CPAS & ADVISORS Relief Approved for TruPS CDOs Under Volcker Rule O nDecember10,2013,theFederalReserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Cur- rency, Securities Exchange Commission and Commodities Futures Trading Commission issued a final rule implementing the Volcker Rule.