Capital One 2014 Annual Report Download - page 28

subject to other regulations covering their business operations, including sales and trading practices, public
offerings, publication of research reports, use and safekeeping of client funds and securities, capital structure,
record-keeping and the conduct of directors, officers and employees.
Capital One Asset Management LLC, which provides investment advice to customers of Capital One, N.A.,
including high net worth individuals, institutions, foundations, endowments and other organizations, is an SEC-
registered investment adviser regulated under the Investment Advisers Act of 1940. Capital One Advisors, LLC
(formerly known as ShareBuilder Advisors, LLC) is also an SEC-registered investment adviser.
Finally, Capital One Agency LLC is a licensed insurance agency that provides both personal and business
insurance services to retail and commercial clients and is regulated by the New York State Department of
Financial Services in its home state and by the state insurance regulatory agencies in the states in which it
operates.
Derivative Activities
In 2012, the Commodity Futures Trading Commission (“CFTC”) and the SEC jointly issued final rules further
defining the Dodd-Frank Act’s “swap dealer” definitions. Based on the final rules, no Capital One entity will be
required to register with the CFTC or SEC as a swap dealer; however, this may change in the future. If such
registration occurs, the registered entity is required to comply with additional regulatory requirements relating to its
derivatives activities. The Dodd-Frank Act also requires all swap market participants to keep swap transaction data
records and report certain information to swap data repositories on a real-time and on-going basis. Further, each
swap, group, category, type or class of swap that the CFTC or SEC determines must be cleared will need to be
cleared through a derivatives clearinghouse unless the swap is eligible for a clearing exemption and executed on a
designated contract market (“DCM”), exchange or swap execution facility (“SEF”), unless no DCM, exchange or
SEF has made the swap available for trading.
Volcker Rule
In December 2013, the Federal Reserve, OCC, FDIC, SEC and CFTC approved a final rule implementing Section
619 of the Dodd-Frank Act, commonly referred to as the “Volcker Rule.” We and each of our subsidiaries, including
the Banks, are subject to the Volcker Rule. The Volcker Rule contains prohibitions on proprietary trading and certain
investments in, and relationships with, covered funds (hedge funds, private equity funds, and similar funds) in each
case as those terms are defined in the rule, and requires that we implement a robust compliance program in
accordance with the requirements of the rule. For covered funds that were not in place prior to December 31, 2013,
banking organizations have until July 21, 2015 to comply with most requirements of the Volcker Rule. On
December 18, 2014, the Federal Reserve issued an order to give all banking entities until July 21, 2016, to conform
their investments in and relationships with covered funds that were in place prior to December 31, 2013 (“legacy
covered funds”). The Federal Reserve also stated that it intends next year to issue an additional one-year extension
of the conformance period for legacy covered funds, until July 21, 2017. Absent a specific extension, banking
organizations must conform their proprietary trading activities to the Volcker Rule by July 21, 2015. We continue
to progress toward compliance with the Volcker Rule and to implement a compliance program designed to meet the
Volcker Rule’s requirements.
Capital Adequacy
The Company and the Banks are subject to capital adequacy guidelines adopted by the Federal Reserve and OCC.
For a further discussion of the capital adequacy guidelines, see “MD&A—Capital Management” and “Note 12—
Regulatory and Capital Adequacy.” The Company and the Banks exceeded minimum regulatory requirements under
these guidelines as of December 31, 2014.
6Capital One Financial Corporation (COF)