Credit Suisse’s access to a key regulatory exemption relied on by banks and money managers to manage U.S. pension funds may be in peril.
The Labor Department granted affiliates of the Swiss bank a one-year extension of their status as a so-called Qualified Professional Asset Managers, while stating in a notice that appeared in the Federal Register Tuesday that it would review whether to extend, or revoke, the key designation due to the bank’s previous convictions and misconduct.
They “constitute serious years-long systemic criminal misconduct that counsels against providing broad relief from ERISA’s prohibited transaction provisions and raises fundamental questions regarding whether the CS Affiliated QPAMs have sufficient integrity to warrant their continued reliance” on the waiver, the Labor Department said.
Any institution or individuals that manage pensions overseen by the Labor Department must seek permission to continue those operations following certain criminal convictions. Credit Suisse’s current request follows an affiliate’s guilty plea in a fundraising scandal that saw hundreds of millions of dollars looted from Mozambique.
Credit Suisse went through a previous Labor Department appeal process following a 2014 guilty plea for helping Americans evade taxes. The bank was granted a one-year extension at that time and ultimately a five-year QPAM wavier to continue managing U.S. pension funds.
Credit Suisse declined to comment. The Labor Department didn’t immediately reply to requests for comment.
The Labor Department wrote that its primary objective in granting the Credit Suisse affiliates a one-year QPAM exemption was so that pension plans “can terminate their relationships with a CS Affiliated QPAM in an orderly and cost-effective fashion in the event the fiduciary of a covered plan determines it is prudent to do so.”
It would be highly unusual, but not unprecedented, for the Labor Department to revoke the QPAM status of a bank like Credit Suisse. In 2016, the agency prohibited Royal Bank of Scotland Group Plc from managing 401(k) plans and other retirement funds.
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