Credit Suisse Asset Management is still managing pension fund assets in the U.S., after the Department of Labor granted the firm a second and longer exemption from being barred from such activity after a criminal conviction.
CSAM could have been prohibited from continuing to manage pension fund assets by virtue (or the lack thereof) of the fact that its banking entity Credit Suisse AG was convicted of helping U.S. citizens avoid taxes overseas.
But instead the DOL granted it a one-year temporary exemption last year.
And now the firm has been granted a second exemption--known as a qualified professional asset manager exemption (QPAM)--that will remain in effect for 10 years.
CSAM manages more than $15 billion for institutional tax-exempt clients in the U.S., and it had already been granted the temporary exemption despite Credit Suisse AG’s guilty plea and subsequent conviction last year.
DOL granted the first exemption before the institution’s conviction, and held a hearing in January “intended to solicit additional information regarding whether the Second Proposed Exemption was in the interest of, and protective of, plans and IRAs, and administratively feasible.”
In the wake of the hearing, the DOL decided to impose additional conditions that will “contain … enhanced conditions for the protection of plans and their participants and beneficiaries.”
Those enhanced conditions simply require that CSAM’s operations be isolated from the parent company and that asset management clients are informed of the firm’s conviction.
Although commenters at the hearing said that denying CSAM the 10-year exemption would discourage the firm from further wrongdoing, DOL said in a statement about its decision that “neither the Credit Suisse Affiliated QPAMs nor the Credit Suisse Related QPAMs were involved in the conduct underlying the Conviction.”
Because of that and “a finding that the Credit Suisse Affiliated QPAMs and the Credit Suisse Related QPAMs (the Credit Suisse QPAMs) operate separately and independently of Credit Suisse AG with respect to their asset management decisions,” the DOL said that it “believes that a full denial of exemptive relief is not warranted.”
Wholly owned Credit Suisse affiliates will have to seek a new exemption after five years, however, and “should be prepared to demonstrate that the conditions of this exemption have been met.
The Department's review of any such application may also extend to Credit Suisse AG's compliance with relevant laws and regulations throughout the duration of this exemption.”
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