The Department of Labor announced Thursday it granted Credit Suisse Asset Management an exemption allowing it to continue providing asset management services to retirement plans after its banking entity Credit Suisse AG was convicted of helping U.S. citizens avoid taxes overseas.
Credit Suisse spokesman Justin Perras said in an e-mail the exemption was granted after “a rigorous evaluation process.”
The company, which managed $15.6 billion for U.S. institutional tax-exempt clients as of Dec. 31, according to Pensions & Investments data, had already been granted a temporary exemption with several conditions to avoid disrupting retirement plan participants. The permanent exemption, which imposed additional conditions, becomes effective Nov. 18, roughly one year after the criminal conviction.
The new conditions require that asset management clients must be informed of the conviction and that operations of Credit Suisse Asset Management be isolated from its parent company.
Such exemptions, known as qualified professional asset manager exemptions, typically last for 10 years. In this case, it will last for 10 years for related managers – those managers in which Credit Suisse AG owns a direct or indirect stake of 5% or more. The exemption will last five years for wholly owned Credit Suisse affiliates, which will need to seek a new exemption after that.
DOL officials received two written comments opposing the granting of the permanent exemption but said they structured the exemption to “insulate” the firm's asset managers, who were not involved in the criminal activity, from Credit Suisse AG.
Bartlett Naylor, financial policy advocate with Congress Watch in Washington, said in an e-mail that the “soft-pillow treatment sends the message to megabanks that Washington will insure that a guilty plea is pain free.” Mr. Naylor said he obtained documents through the Freedom of Information Act that he said show DOL officials communicated with Justice Department officials in advance of the criminal conviction.
Labor Department officials declined to comment.