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The Dodd-Frank Wall Street Reform and Consumer Protection Act

What is the Dodd-Frank Wall Street Reform and Consumer Protection Act?

Signed into law in 2010, the Dodd-Frank Act is a sweeping legislation package that strengthens the oversight and supervision of financial institutions, especially banks and insurance companies. It was created in response to the financial crisis of 2008-2009, which was precipitated by the proliferation of complex and little-understood financial instruments that caused enormous losses in investment portfolios globally.


What is the Financial Stability Oversight Council?

The FSOC was created under Dodd-Frank to oversee financial institutions. It is meant to identify risks to U.S. financial stability that may arise from ongoing activities of large, interconnected financial companies, as well as from outside the financial services marketplace. One of the primary responsibilities of the FSOC is the designation of systemically important financial institutions (SIFI) that would pose an excessive risk to the economy at large were they to fail.


Which kinds of alternative financial institutions are now subject to the SEC’s authority under Dodd-Frank but previously were not?

The SEC now requires hedge funds that manage more than $100 million to register as investment advisers and also requires registration of municipal financial advisers, swap advisers and investment brokers. Under Dodd-Frank, the SEC was also granted authority to enforce rules established by the Municipal Securities Rulemaking Board, while the Act raised the threshold for investment advisers subject to federal regulation from $25 million to $100 million. Many private fund advisers are now required to register with the SEC, with exemptions made for (1) those that advise solely venture capital funds; (2) advisers solely to private funds with less than $150 million in assets under management in the U.S. and (3) certain foreign advisers without a place of business in the U.S.


What is the Volcker Rule and is it meant to accomplish?

The Volcker Rule, provided for in Section 619, prohibits insured depository institutions and companies affiliated with insured depository institutions (banking entities) from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The rules also impose limits on banks’ investments in, and other relationships with, hedge funds or private equity funds. 


What does Dodd-Frank do to better regulate financial derivatives?

Dodd-Frank mandates that the riskiest derivatives, including credit default swaps, be regulated by the SEC or the Commodity Futures Trading Commission (CFTC). This ensures that excessive risk-taking can be identified and brought to policy-makers' attention before a major crisis occurs. The law also requires that a clearinghouse, which resembles a stock exchange, be set up where such derivative trades can be transacted in public. But Dodd-Frank leaves it up to the regulators to determine exactly the best way to put this into place, which has led to a series of studies and international negotiations.

Enforcement Action Blog

SEC doles out its largest ever whistleblower awards

Jaclyn Jaeger | March 19, 2018

The Securities and Exchange Commission today announced its highest ever Dodd-Frank whistleblower awards, with two whistleblowers sharing a nearly $50 million award and a third whistleblower receiving more than $33 million.

The Filing Cabinet Blog

Groups call for expulsion of Exxon and Chevron from anti-corruption group

Joe Mont | February 8, 2018

U.S civil society organizations are demanding that Exxon and Chevron have their membership in the Extractive Industries Transparency Initiative Board revoked for actions that “constitute violations of the  Code of Conduct." 

The Filing Cabinet Blog

Bill targets ‘burdensome’ Dodd-Frank regulations, SIFI designations

Joe Mont | October 4, 2017

Bipartisan legislation is looking to bring regulatory relief to regional banks and bring about new ways for calculating whether an institution should be designated as systemically important.

The Filing Cabinet Blog

Yellen pushes back on deregulation with rousing defense of post-crisis rules

Joe Mont | August 30, 2017

Amid the current political hunger for deregulation, Janet Yellen, chairman of the Board of Governors of the Federal Reserve, recently delivered an impassioned defense of the current regulatory environment. Don’t drop the ball now, she warned.

News Article

Rhetoric begins to shift to regulatory easing

Joe Mont | August 1, 2017

While members of the Trump Administration wave off persistent critics, rule changes are starting to take root, notably for the Volcker rule.

The Filing Cabinet Blog

GOP turns to Congressional Review Act for killing arbitration rule

Joe Mont | July 12, 2017

Within hours of the CFPB issuing a new rule banning the mandatory use of arbitration agreements, Republicans threatened to rescind it using the Congressional Review Act.

The Filing Cabinet Blog

Dems: stress tests ‘show Dodd-Frank is working’

Joe Mont | June 28, 2017

Good news from the latest round of big bank stress tests is giving Senate Democrats ammunition as they defend the Dodd-Frank Act against repeal-and-replace efforts.

Accounting & Auditing Update Blog

SOX exemption saves plenty, costs more, study says

Tammy Whitehouse | June 21, 2017

A new study calculates the cost and benefit of exempting smaller companies from SOX internal control audits — and it suggests investors aren't better off.