We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
A covered subsidiary refers to a type of company that is part of a larger financial organization, known as a covered financial company. However, it specifically excludes certain entities, including:
Insured depository institutions, such as banks that are insured by the Federal Deposit Insurance Corporation (FDIC).
Insurance companies.
Covered brokers or dealers, which are firms that engage in buying and selling securities.
This term is primarily used in the context of financial regulation and oversight, particularly under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Table of content
Legal Use & context
The term "covered subsidiary" is used in the realm of banking and financial regulation. It plays a crucial role in the orderly liquidation authority established by the Dodd-Frank Act, which aims to manage the dissolution of failing financial institutions to prevent systemic risk.
Legal professionals may encounter this term when dealing with issues related to financial stability, corporate structure, and regulatory compliance. Users can utilize legal templates from US Legal Forms to navigate related processes effectively.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A large financial conglomerate has multiple subsidiaries, including a bank, an insurance company, and a securities firm. The securities firm is classified as a covered subsidiary because it is not an insured depository institution or an insurance company.
Example 2: A hypothetical situation where a financial company has a subsidiary that provides financial advisory services. This subsidiary would be considered a covered subsidiary under the definition, as it does not fall into the excluded categories.
Relevant laws & statutes
The primary statute governing covered subsidiaries is the Dodd-Frank Wall Street Reform and Consumer Protection Act, specifically under 12 USCS § 5381. This law outlines the criteria for identifying covered subsidiaries and the regulatory framework for their oversight.
Comparison with related terms
Term
Definition
Covered financial company
A financial institution that has been designated as systemically important and is subject to additional regulatory requirements.
Insured depository institution
A bank or savings institution that is insured by the FDIC, providing deposit insurance to protect depositors.
Covered broker or dealer
A firm that is registered with the Securities and Exchange Commission (SEC) and engages in the buying and selling of securities.
Common misunderstandings
What to do if this term applies to you
If you are involved with a covered subsidiary, it is important to understand the regulatory requirements that apply. You may want to:
Consult with a legal professional to ensure compliance with relevant laws.
Explore US Legal Forms for templates that can help manage documentation and compliance processes.
Stay informed about changes in financial regulations that may impact your operations.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
A subsidiary of a covered financial company, excluding certain entities.
Relevant Law
Dodd-Frank Wall Street Reform and Consumer Protection Act
Excluded Entities
Insured depository institutions, insurance companies, covered brokers or dealers
Key takeaways
Frequently asked questions
A covered subsidiary is a subsidiary of a covered financial company that does not fall under specific excluded categories such as banks or insurance companies.
The Dodd-Frank Act establishes the framework for identifying and regulating covered subsidiaries to ensure financial stability.
No, insured depository institutions, which include banks, are specifically excluded from being classified as covered subsidiaries.