Several financial watchdog groups opposed Credit Suisse Asset Management's bid to continue providing money management services to retirement plans in the U.S.
At a public hearing Thursday several groups, including Public Citizen, argued against the Department of Labor granting the permission; others called for allowing it, but with stringent conditions beyond what the DOL has already imposed.
In May, CSAM's parent, Credit Suisse AG, pleaded guilty to helping U.S. citizens avoid paying taxes.
Last November, the Department of Labor granted CSAM a temporary exemption with several conditions, in order to avoid disrupting retirement plan investments. The money management division managed $17.8 billion for U.S. institutional tax-exempt clients as Dec. 31, 2013, according to Pensions & Investments data, with more than $2 billion in the plans that could be affected by the decision.
DOL officials have granted waivers for all firms seeking individual waivers since 1997, with conditions specific to each case. The conditions imposed for Credit Suisse, including annual training and independent auditing, “are formidable,” Stephen Saxon, chairman of Groom Law Group, whose firm was involved in shaping the exemption process, said at the hearing Thursday. “It is one of the most, if not the most, demanding exemption,” Mr. Saxon said.
Rep. Maxine Waters, D-Calif., the ranking member of the House Financial Services Committee who requested the hearing, said in a letter Thursday to Labor Secretary Thomas Perez that the request should be denied, because committee members “are very concerned with the recent practice of our regulators reflexively granting waivers of sanctions in the law designed to deter future wrongful conduct.”
Bill Johnson, deputy head of Credit Suisse Asset Management, said at the hearing that the exemption “is in the best interests of the department and (retirement plan) participants” whose sponsors would otherwise incur significant costs finding alternative managers.