Bloomberg notes that Citigroup has invested $800 million of shareholders money in the firm's own hedge funds. Wasn't that supposed to be a "no-no" under the Volcker Rule?

For the most part, the answer is yes. But the law does allow some prop investment in alternative funds. Banks can own up to 3 percent of hedge funds and private-equity funds and up to 3 percent of Tier 1 capital in the funds. The new investments reflect previous commitments, Citigroup told the news service. 

In addition, the new investments were more than offset by previous withdrawals, so the bank is not moving against the grain in terms of overall compliance with the rule. This is not a hugely controversial aspect of the Volcker Rule. The fact is that regulators are fine with--and even encourage--banks putting some of their own skin in the game. But the fact is that $800 million does not amount to a lot of skin, so such benefits are likely to be nil.

The more controversial aspects of the rule remain the exceptions to the ban on proprietary trading. It's still not exactly clear how it will all go down and how companies will be able to track all the allowed activities, such as hedging and market making. We're also continuing to see Citigroup and others wind down prop trading units to comply; some of the units suffered some huge losses anyway. Most assume that Citi will continue to wind down these units.  

For more:
- here's the article   

Related articles:
An alternative to the Volcker Rule   
The big picture on the Volcker Rule   
Citi CEO strikes a conciliatory tone