The Department of Labor has announced that on Jan. 15, 2015 it will hold a hearing on whether Credit Suisse affiliates can serve as qualified professional asset managers (QPAMs). The DOL is considering this matter in light of Credit Suisse’s Sept. 3, 2014 guilty plea to one count of conspiracy to engage in tax fraud.
As a result of Credit Suisse’s guilty plea, its affiliates could be restricted from engaging in many commercial transactions on behalf of private pension plans and IRAs. The DOL on Sept. 3 proposed a 10-year exemption for the affiliates that would allow them to continue to provide certain services as QPAMs to retirement plan clients. Without the exemption, disruptions in retirement plan investments could result. In the past, the DOL has granted such exemptions, but included stipulations intended to protect those covered by the retirement plans.
The DOL received requests for a public hearing on the matter. On Nov. 17 it issued a temporary exemption, since the date of Credit Suisse’s conviction is tentatively scheduled for Nov. 21, but it had not yet held the public hearing. It did not make a final determination because it is possible that new information regarding transactions may be forthcoming. Nonetheless, the DOL wanted to protect the affected retirement plans and IRAs from incurring costs and losses that could result if it did not issue the temporary exemption.
The temporary exemption lasts for one year, and is intended to last no longer than the amount of time necessary for the DOL to determine whether it should provide more permanent relief.
The DOL included the following conditions in the temporary exemption:
• the development of extensive policies and procedures designed to ensure that the affiliates fully comply with their fiduciary duties;
• stringent reporting requirements;
• mandatory training of Credit Suisse personnel regarding their legal and ethical responsibilities; and
• an independent audit of the Credit Suisse affiliates’ compliance with their fiduciary obligations and the terms of the exemption.
The exemption also requires Credit Suisse to notify affected plans and IRAs of the facts leading to the forthcoming criminal conviction and its consequences.
The hearing will take place on Jan. 15, 2015 at DOL headquarters, located at 200 Constitution Ave. NW, Washington, DC 20210.
As a result of Credit Suisse’s guilty plea, its affiliates could be restricted from engaging in many commercial transactions on behalf of private pension plans and IRAs. The DOL on Sept. 3 proposed a 10-year exemption for the affiliates that would allow them to continue to provide certain services as QPAMs to retirement plan clients. Without the exemption, disruptions in retirement plan investments could result. In the past, the DOL has granted such exemptions, but included stipulations intended to protect those covered by the retirement plans.
The DOL received requests for a public hearing on the matter. On Nov. 17 it issued a temporary exemption, since the date of Credit Suisse’s conviction is tentatively scheduled for Nov. 21, but it had not yet held the public hearing. It did not make a final determination because it is possible that new information regarding transactions may be forthcoming. Nonetheless, the DOL wanted to protect the affected retirement plans and IRAs from incurring costs and losses that could result if it did not issue the temporary exemption.
The temporary exemption lasts for one year, and is intended to last no longer than the amount of time necessary for the DOL to determine whether it should provide more permanent relief.
The DOL included the following conditions in the temporary exemption:
• the development of extensive policies and procedures designed to ensure that the affiliates fully comply with their fiduciary duties;
• stringent reporting requirements;
• mandatory training of Credit Suisse personnel regarding their legal and ethical responsibilities; and
• an independent audit of the Credit Suisse affiliates’ compliance with their fiduciary obligations and the terms of the exemption.
The exemption also requires Credit Suisse to notify affected plans and IRAs of the facts leading to the forthcoming criminal conviction and its consequences.
The hearing will take place on Jan. 15, 2015 at DOL headquarters, located at 200 Constitution Ave. NW, Washington, DC 20210.
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