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The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 989
SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE
STUDY ON PROPRIETARY TRADING.
(a) DEFINITIONS.—In
this section`
(1) the term ‘‘covered entity’’ means—
(A) an insured depository institution, an affiliate of an
insured depository institution, a bank holding company,a financial
holding company, or a subsidiary of a bank holding company or a
financial holding company, as those terms are defined in the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.); and
(B) any other entity, as the Comptroller General of the United
States may determine; and
(2) the term ‘‘proprietary
trading’’ means the act of a covered entity investing as a
principal in securities, commodities, derivatives, hedge funds,
private equity firms, or such other financial products or entities
as the Comptroller General may determine.
(b)
STUDY.—
(1) IN GENERAL.—The
Comptroller General of the United States shall conduct a study
regarding the risks and conflicts associated with proprietary
trading by and within covered entities, including an evaluation
of—
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States financial
system, and if so, the costs and benefits of options for
mitigating such systemic risk;
(B) whether proprietary
trading presents material risks to the safety and soundness of the
covered entities that engage in such activities, and if so, the
costs and benefits of options for mitigating such risks;
(C) whether proprietary trading presents material conflicts of
interest between covered entities that engage in proprietary
trading and the clients of the institutions who use the firm to
execute trades or who rely on the firm to manage assets, and if
so, the costs and benefits of options for mitigating such
conflicts of interest;
(D) whether adequate disclosure
regarding the risks and conflicts of proprietary trading is
provided to the depositors, trading and asset management clients,
and investors of covered entities that engage in proprietary
trading, and if not, the costs and benefits of options for the
improvement of such disclosure; and
(E) whether the
banking, securities, and commodities regulators of institutions
that engage in proprietary trading have in place adequate systems
and controls to monitor and contain any risks and conflicts of
interest related to proprietary trading, and if not, the costs and
benefits of options for the improvement of such systems and
controls.
(2) CONSIDERATIONS.—In
carrying out the study required under paragraph (1), the
Comptroller General shall consider—
(A) current practice
relating to proprietary trading;
(B) the advisability of a
complete ban on proprietary trading;
(C) limitations on the
scope of activities that covered entities may engage in with
respect to proprietary trading;
(D) the advisability of
additional capital requirements for covered entities that engage
in proprietary trading;
(E) enhanced restrictions on
transactions between affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to proprietary
trading;
(G) enhanced public disclosure relating to
proprietary trading; and
(H) any other options the
Comptroller General deems appropriate.
(c)
REPORT TO CONGRESS.—Not later than 15
months after the date of enactment of this Act, the Comptroller
General shall submit a report to Congress on the results of the
study conducted under subsection (b).
(d)
ACCESS BY COMPTROLLER GENERAL.—For
purposes of conducting the study required under subsection (b),
the Comptroller General shall have access, upon request, to any
information, data, schedules, books, accounts, financial records,
reports, files, electronic communications, or other papers,
things, or property belonging to or in use by a covered entity
that engages in proprietary trading, and to the officers,
directors, employees, independent public accountants, financial
advisors, staff, and agents and representatives of a covered
entity (as related to the activities of the agent or
representative on behalf of the covered entity), at such
reasonable times as the Comptroller General may request.
The Comptroller General may make and retain copies of books,
records, accounts, and other records, as the Comptroller General
deems appropriate.
(e)
CONFIDENTIALITY OF REPORTS.—
(1) IN GENERAL.—Except
as provided in paragraph (2), the Comptroller General may not
disclose information regarding—
(A) any proprietary trading
activity of a covered entity, unless such information is disclosed
at a level of generality that does not reveal the investment or
trading position or strategy of the covered entity for any
specific security, commodity, derivative, or other investment or
financial product; or
(B) any individual interviewed by the
Comptroller General for purposes of the study under subsection
(b), unless such information is disclosed at a level of generality
that does not reveal—
(i) the name of or identifying
details relating to such individual; or
(ii) in the case of
an individual who is an employee of a third party that provides
professional services to a covered entity believed to be engaged
in proprietary trading, the name of or any identifying details
relating to such third party.
(2)
EXCEPTIONS.—The Comptroller General may disclose the
information described in paragraph (1)—
(A) to a
department, agency, or official of the Federal Government, for
official use, upon request;
(B) to a committee of Congress,
upon request; and
(C) to a court, upon an order of such
court.
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