Credit Suisse Pension Waiver Should Be Denied, Waters SaysNeil Weinberg
Credit Suisse Group AG’s bid to continue managing U.S. pensions after its conviction for helping American clients evade taxes should be rejected by the Labor Department unless the bank improves controls against wrongdoing, according to Representative Maxine Waters.
Waters, the top Democrat on the House Financial Services panel, sent a letter to Labor Secretary Thomas Perez today ahead of an agency hearing in Washington on Credit Suisse’s status as a pension manager, which Waters and two colleagues had pressed the department to hold.
“I believe that at this point, the waiver should be denied given the lack of important public facts and the insufficient proposed conditions,” Waters wrote. If regulators continue to routinely approve waivers, they will be “throwing away valuable enforcement tools and enshrining a policy of too-big-to-bar.”
Unless Labor grants a waiver, the Swiss bank will be disqualified from handling U.S. pension funds following its guilty plea last year to helping thousands of Americans evade U.S. taxes. Credit Suisse oversees billions of dollars of assets for more than 100 U.S. pension plans, according to a July court filing.
Credit Suisse has three asset management units seeking waivers to continue managing U.S. pension funds, Roger Machlis, head of Credit Suisse Asset Management’s legal and compliance unit, said at the hearing. John Popp, managing director of the asset management unit, who also spoke at the hearing, estimated more than 1 million individuals are in the pension plans it manages.
Justin Perras, a Credit Suisse spokesman, and Michael Trupo, a spokesman for the Labor Department, declined to comment on the letter.
Waters, who is from California, led opposition to Republican efforts to roll back Dodd-Frank constraints on Wall Street. She said the Labor Department’s designation of a bank as a so-called Qualified Professional Asset Manager should be “reserved for those financial institutions that ‘maintain a high standard of integrity.’” She urged the department to weigh Credit Suisse’s “recidivist history” in deciding whether to grant the waiver, noting that the bank entered into a deferred prosecution agreement with the Justice Department in 2009 for U.S. sanctions violations.
The department, which has asked the bank to hire an independent monitor, should require Credit Suisse to disclose more information about its pension units and bar any employees who have been involved in wrongdoing elsewhere.
“Such a restriction would assure our nation’s retirees that those involved in Credit Suisse’s decades-long scheme to assist thousands of Americans evade taxes will not be involved in directing their securities in risky, conflict-ridden transactions” involving their pensions, the letter said.