On February 27, 2015, The Volcker Inter-Agency Group posted a new frequently asked question ("FAQ 13") clarifying the scope of the marketing restriction under the Solely Outside the US ("SOTUS") covered fund exemption. FAQ 13 adopts the position that the marketing restriction applies only to the activities of a foreign banking entity (including its affiliates) that seeks to rely on the SOTUS covered fund exemption and does not apply to where the foreign banking entity seeks to invest in a covered fund that is sponsored and marketed by a third party. As defined in the FAQ, "third-party covered fund" means a covered fund in which "the foreign banking entity (including its affiliates) does not sponsor, or serve, directly or indirectly, as the investment manager, investment adviser, commodity pool operator or commodity trading advisor to, the covered fund." This view is consistent with limiting the extraterritorial application of section 13 to foreign banking entities while seeking to ensure that the risks of covered fund investments by foreign banking entities occur and remain solely outside of the United States.
The Volcker Rule FAQ is available at: http://www.federalreserve.gov/bankinforeg/volcker-rule/faq.htm#13.
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