Page:United States Statutes at Large Volume 124.djvu/1653

 124 STAT. 1627 PUBLIC LAW 111–203—JULY 21, 2010 ‘‘(ii) making a de minimis investment. ‘‘(B) LIMITATIONS AND RESTRICTIONS ON INVEST- MENTS.— ‘‘(i) REQUIREMENT TO SEEK OTHER INVESTORS.— A banking entity shall actively seek unaffiliated inves- tors to reduce or dilute the investment of the banking entity to the amount permitted under clause (ii). ‘‘(ii) LIMITATIONS ON SIZE OF INVESTMENTS.—Not- withstanding any other provision of law, investments by a banking entity in a hedge fund or private equity fund shall— ‘‘(I) not later than 1 year after the date of establishment of the fund, be reduced through redemption, sale, or dilution to an amount that is not more than 3 percent of the total ownership interests of the fund; ‘‘(II) be immaterial to the banking entity, as defined, by rule, pursuant to subsection (b)(2), but in no case may the aggregate of all of the interests of the banking entity in all such funds exceed 3 percent of the Tier 1 capital of the banking entity. ‘‘(iii) CAPITAL.—For purposes of determining compliance with applicable capital standards under paragraph (3), the aggregate amount of the outstanding investments by a banking entity under this paragraph, including retained earnings, shall be deducted from the assets and tangible equity of the banking entity, and the amount of the deduction shall increase commensurate with the leverage of the hedge fund or private equity fund. ‘‘(C) EXTENSION.—Upon an application by a banking entity, the Board may extend the period of time to meet the requirements under subparagraph (B)(ii)(I) for 2 addi- tional years, if the Board finds that an extension would be consistent with safety and soundness and in the public interest. ‘‘(e) ANTI-EVASION.— ‘‘(1) RULEMAKING.—The appropriate Federal banking agen- cies, the Securities and Exchange Commission, and the Com- modity Futures Trading Commission shall issue regulations, as part of the rulemaking provided for in subsection (b)(2), regarding internal controls and recordkeeping, in order to insure compliance with this section. ‘‘(2) TERMINATION OF ACTIVITIES OR INVESTMENT.—Notwith- standing any other provision of law, whenever an appropriate Federal banking agency, the Securities and Exchange Commis- sion, or the Commodity Futures Trading Commission, as appro- priate, has reasonable cause to believe that a banking entity or nonbank financial company supervised by the Board under the respective agency’s jurisdiction has made an investment or engaged in an activity in a manner that functions as an evasion of the requirements of this section (including through an abuse of any permitted activity) or otherwise violates the restrictions under this section, the appropriate Federal banking agency, the Securities and Exchange Commission, or the Com- modity Futures Trading Commission, as appropriate, shall Deadline.