The Department of Labor is tentatively denying affiliates of Deutsche Bank AG, UBS AG and Royal Bank of Scotland Group the right to serve U.S. retirement plan clients because of criminal convictions related to LIBOR manipulations and other charges.
Money managers whose firms, parents or affiliates are convicted on criminal charges must seek individual exemptions to serve as qualified professional asset managers for pension fund clients from the DOL, which has faced increased criticism about its process and the granting of QPAM exemptions.
However, DOL officials on Monday proposed granting Deutsche Bank a temporary exemption for nine months, with several conditions. The other banks, whose sentencing on the criminal convictions is expected later, have not been offered a temporary exemption.
“We take the concerns in the tentative denial letter very seriously and will actively engage with the Department of Labor to address them,” Deutsche Bank said in a statement.
As of Dec. 31, Deutsche Asset & Wealth Management ran $11.5 billion in U.S. institutional tax-exempt assets, according to Pensions & Investments’ data.
UBS in a statement said: “We continue to engage with the DOL through the full application process to provide the information that we believe supports the grant of an exemption.”
As of Dec. 31, UBS Global Asset Management ran $55.3 billion in U.S. institutional tax-exempt assets, according to P&I data.
In separate letters sent to the three firms July 16-17, Lyssa Hall, director of the exemption determinations office within the Employee Benefits Security Administration, said that the tentative decision to deny the banks’ applications was based on “applicants’ failure to demonstrate” that the exemptions would be in the interest of the plan clients and protective of plan participants.
The last time that the DOL issued a tentative denial was in 2013 to UBS, which later was granted a QPAM exemption. “Every single exemption contains conditions that protect plans and participants,” DOL spokesman Michael Trupo said in an interview.
Aaron M. Cunningham, director of research and analytics, contributed to this story.
