Credit Suisse’s US asset management business will not be barred from managing the assets of domestic pension funds, after it won a five-year exemption.
The exemption – necessary after the Swiss bank last May pleaded guilty to helping US clients file false tax returns and received a 10-year ban – was granted by the US Department of Labor.
In the note detailing the exemption, the department said it was Credit Suisse AG, the Zurich-based parent, that was subject to the conviction rather than its qualified professional asset manager (QPAM).
Credit Suisse’s US asset managers will be required to undergo annual audits to ensure they comply with the Employee Retirement Income Security Act (ERISA), a prerequisite for the firm to be offered a further five-year exemption that would allow it to continue acting as asset manager for pension clients without interruptions.
The US department justified its decision to offer an exemption, rather than uphold the ban on Credit Suisse, by arguing that it would allow for the imposition of “stringent conditions” on the asset manager’s operations for the next decade, which would otherwise not be possible.
“As a regulator,” it said in the note, “the department will proactively investigate the operations of the Credit Suisse QPAMs, review each exemption audit submitted by the independent auditor and take whatever action it deems necessary to ensure affected plans and IRAs are adequately protected.”
A number of other European financial services groups are hoping for exemptions after pleading guilty in cases including the manipulation of LIBOR.
Commenting on the department’s decision, a spokesman for Credit Suisse said: “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.”