Dodd-Frank Act Still Evolving

Dodd-Frank Act Still Evolving

Dodd-Frank was passed in 2010 in response to the 2008 financial crisis. The Act requires numerous regulatory agencies, including the Securities Exchange Commission (SEC), Commodities Futures Trading Commission (CFTC) and others, to create rules that will have the effect of revamping the U.S. financial system and impacting all federal regulatory agencies and the majority of the country’s financial services industry. Due to the all-inclusive nature of this legislation, only half of the rules required by the law have been completed.

It has been reported that of the 398 rules mandated by the Dodd-Frank Act, only 206 finalized rules have been completed. The law has been a source of contention and rulemakers have met with opposition from well-funded industry leaders and lobbyists. Not to mention, the Act requires multiple federal agencies with sometimes conflicting views to steer the legislation into final rules.

One of the accomplishments under the law is the “Volcker rule,” which restricts securities trading by U.S. banks. Additionally, the CFTC has completed a large portion of the rules reshaping the market for the complex financial instruments known as swaps.

Unfortunately, the SEC’s regulations covering swaps markets tied to loans and other securities remains incomplete. According to the SEC, the “Act contains more than 90 provisions that require SEC rulemaking, and dozens of other provisions that give the SEC discretionary rulemaking authority. Of the mandatory rulemaking provisions, the SEC has proposed or adopted rules for more than three-quarters.”

Agencies and regulators are continuing to work to meet their Dodd-Frank obligations, so it will be interesting to see what progress is made in this next year.

If you have any questions about the Dodd-Frank Act or would like to discuss other corporate, securities and investment banking matters, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work.