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From Banking and Finance Law Daily, December 29, 2014

Latest Volcker Rule FAQ discusses FOIA protection for metric reporting

By John M. Pachkowski, J.D.

The Federal Reserve Board has updated its Frequently Asked Questions regarding the application of section 13 to the Bank Holding Company Act of 1956 (BHC Act), commonly referred to as the Volcker Rule, and regulations adopted by the Fed, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission. The Fed noted that while the FAQs apply to banking entities for which the Fed has jurisdiction under section 13 of the BHC Act, they have been developed by staffs of all five agencies.

The latest FAQ examined whether the metrics data that a banking entity must report under Appendix A of the final rule is protected by the Freedom of Information Act (FOIA).

Some firms have stated that metrics data reported to the agencies represent confidential proprietary information of the banking entity and thereby entitled to protection under exemption 4 of the FOIA—5 U.S.C. §552(b)(4). Specifically, exemption 4 of the FOIA protects matters that are trade secrets and commercial or financial information obtained from a person that is privileged or confidential.

In their response, the staffs of the agencies encouraged banking entities subject to Appendix A to evaluate exemptions available under the FOIA for their reported metrics information and to request confidential treatment as appropriate pursuant to the Fed’s regulations codified at 12 C.F.R. §261.15. The staff added other exemptions may also apply and that the agencies “expect to maintain the confidentiality of the reported metrics information to the extent permitted by law.”

The Fed issued its first set of FAQs in June 2014. That first set elaborated on applicable definitions and exemptions, and is designed to assist banking entities in maintaining compliance with recordkeeping and reporting obligations. They also covered: the breadth of the term “trading desk” and related reporting obligations; how to comply with the conformance period requirements; application of the “covered fund” exclusions for loan securitizations and foreign public funds; and the naming of covered funds and banking entities (see Banking and Finance Law DailyJune 11, 2014).

In a September 2014 update, the agencies’ staff discussed when a banking entity, which is subject to the enhanced minimum standards for compliance program requirements under the agencies’ regulations, must file its annual first annual CEO attestation to the relevant agency (see Banking and Finance Law DailySept. 11, 2014).

A third update was released in November 2014 and discussed metrics reporting during the conformance period and treatment of mortgage-backed securities issuers sponsored by government-sponsored enterprises (GSEs) treated under the final rule's covered funds provisions (see Banking and Finance Law DailyNov. 14, 2014).

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