Credit Suisse Gets U.S. Clearance to Keep Managing PensionsNeil Weinberg
Units of Credit Suisse AG will receive waivers from the U.S. Labor Department that will allow them to continue managing roughly $2 billion in pension funds for about a million U.S. clients, the bank said.
The bank, a unit of Credit Suisse Group AG, was required to seek the waivers to retain its status as a Qualified Professional Asset Manager -- a key designation for firms managing pension plans -- as a result of its conviction last year for helping Americans evade income taxes. In granting the waiver, the Labor Department said it found no evidence the bank’s pension units were involved in the wrongdoing that led to its guilty plea. The waiver will require Credit Suisse to shelter its asset management operations from the unit that pleaded guilty.
Its receipt of a long-term waiver comes as several other banks that pleaded guilty in relation to rigging currency or interest rate benchmarks await word on their own Labor Department waivers. They include JPMorgan Chase & Co., UBS Group AG, Deutsche Bank AG and Royal Bank of Scotland Group Plc.
“There clearly has been a nervousness in the market, given the politics, about what the Department of Labor would do,” said Andrew Oringer, a partner at Dechert LLP, who has done work for Credit Suisse, but didn’t represent the bank in this matter. “It’s starting to become evident that the banks and their clients can start to breathe a sigh of relief.”
Credit Suisse has been operating under temporary waivers, which expire Nov. 17. The exemptions take effect the next day, according to a Labor Department notice to be published in the Federal Register on Friday. Three units wholly owned by Credit Suisse were granted five-year waivers, while several more asset managers in which the bank says it holds smaller stakes received 10-year waivers.
“We are pleased that the Department of Labor has granted our QPAM exemption following a rigorous evaluation process, and we look forward to continuing to work on our clients’ behalf,” Credit Suisse said in an e-mailed statement.
Michael Trupo, a Labor Department spokesman, declined to comment.
Any institution or individual that manages pensions overseen by the Labor Department must seek permission to continue those operations following certain criminal convictions. The department, which oversees about $8 trillion in private-sector pensions, has faced unprecedented criticism over its granting of waivers to institutions found guilty of crimes.
The Labor Department “is not a rubber stamp,” Trupo told Bloomberg News in June 2014, in asserting that Credit Suisse’s application would receive close scrutiny. In response to pressure from Congressional Democrats and others, the Labor Department in January held its first-ever public hearing about Credit Suisse’s waiver application.
(An earlier version of this story was corrected to show a more complete number of Credit Suisse units receiving waivers from the Labor Department.)