Royal Bank of Scotland Group was denied an exemption by the Department of Labor to serve retirement fund clients following its banking affiliate's criminal conviction for currency and price fixing.
Such exemptions, known as qualified professional asset managers, are required whenever a money manager's affiliates or parent is convicted on criminal charges. The Labor Department had tentatively denied RBS' QPAM application in July 2015, before RBS sold its remaining interest in an affiliate, Citizens Financial Group, that handled ERISA accounts. In denying the application, Lyssa Hall, the DOL's exemption determinations director, told RBS in an Oct. 6 letter that granting an exemption “would not be in the interests of any plans and their participants and beneficiaries.”
Calls to RBS and its attorney, Jeffrey Crandall of Davis Polk & Wardell, were not returned by press time.
Sen. Elizabeth Warren, D-Mass., a critic of such exemptions, praised the decision in a statement. “We're glad the Department of Labor is protecting our nation's retirees by denying RBS the 'stamp of approval' QPAM status in the wake of RBS' egregious criminal misconduct.”
In July 2015, the Labor Department tentatively denied QPAM exemption requests from Deutsche Bank and UBS for their money management units. Both were convicted earlier that year of manipulating benchmark interest rates and other charges. Barclays and J.P. Morgan Chase have also applied for QPAM exemptions for their money management units. Deutsche Bank was granted a temporary exemption, which DOL officials on Wednesday proposed extending.
“While other regulators have reflexively granted similar waiver requests, the DOL has taken a more thoughtful and patient approach that will protect retirees, investors and the American public. As the DOL considers the waiver petitions from the remaining four banks, we urge the department to fully utilize its disqualification authority,” Ms. Warren said.