124 STAT. 1628 PUBLIC LAW 111–203—JULY 21, 2010 order, after due notice and opportunity for hearing, the banking entity or nonbank financial company supervised by the Board to terminate the activity and, as relevant, dispose of the invest- ment. Nothing in this paragraph shall be construed to limit the inherent authority of any Federal agency or State regu- latory authority to further restrict any investments or activities under otherwise applicable provisions of law. ‘‘(f) LIMITATIONS ON RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.— ‘‘(1) IN GENERAL.—No banking entity that serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity fund, or that organizes and offers a hedge fund or private equity fund pursu- ant to paragraph (d)(1)(G), and no affiliate of such entity, may enter into a transaction with the fund, or with any other hedge fund or private equity fund that is controlled by such fund, that would be a covered transaction, as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c), with the hedge fund or private equity fund, as if such banking entity and the affiliate thereof were a member bank and the hedge fund or private equity fund were an affiliate thereof. ‘‘(2) TREATMENT AS MEMBER BANK.—A banking entity that serves, directly or indirectly, as the investment manager, invest- ment adviser, or sponsor to a hedge fund or private equity fund, or that organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), shall be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c– 1), as if such banking entity were a member bank and such hedge fund or private equity fund were an affiliate thereof. ‘‘(3) PERMITTED SERVICES.— ‘‘(A) IN GENERAL.—Notwithstanding paragraph (1), the Board may permit a banking entity to enter into any prime brokerage transaction with any hedge fund or private equity fund in which a hedge fund or private equity fund managed, sponsored, or advised by such banking entity has taken an equity, partnership, or other ownership interest, if— ‘‘(i) the banking entity is in compliance with each of the limitations set forth in subsection (d)(1)(G) with regard to a hedge fund or private equity fund organized and offered by such banking entity; ‘‘(ii) the chief executive officer (or equivalent officer) of the banking entity certifies in writing annually (with a duty to update the certification if the information in the certification materially changes) that the conditions specified in subsection (d)(1)(g)(v) are satisfied; and ‘‘(iii) the Board has determined that such trans- action is consistent with the safe and sound operation and condition of the banking entity. ‘‘(B) TREATMENT OF PRIME BROKERAGE TRANSACTIONS.— For purposes of subparagraph (A), a prime brokerage trans- action described in subparagraph (A) shall be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c- 1) as if the counterparty were an affiliate of the banking entity.
