Updated with correction
Five money managers affiliated with banks convicted of currency price fixing may get temporary exemptions to continue serving retirement fund clients on Friday from the Department of Labor, which also proposed granting five-year exemptions.
Such exemptions, known as qualified professional asset managers, are required whenever a money manager's affiliates or parent is convicted on criminal charges.
In a notice on the Federal Register website that will be published Monday, the Department of Labor proposed granting the exemptions for money management units of Deutsche Bank, Citigroup, Barclays Capital, J.P. Morgan Chase and UBS, under certain conditions. The temporary one-year exemptions start from the date of each firm's criminal sentencing, which begins with UBS on Nov. 29. The Department of Labor will take comments or hearing requests for 45 days after publication before deciding.
The DOL said in the notice that the temporary exemptions are being sought “in order to protect ERISA-covered plans and IRAs from certain costs and/or investment losses” that could arise if plan sponsors had to sever ties with money managers without QPAM exemptions.
In its application, Deutsche Bank said a typical plan client could incur up to $40,000 in consulting fees and up to $30,000 in legal fees to find a new investment manager, plus transaction costs to liquidate holdings early, and additional transaction costs for real estate investments.
The proposed five-year exemptions are subject to more stringent conditions, such as independent auditing and reporting. The one-year temporary exemptions “will allow the department sufficient time to contemplate whether or not to grant the five-year exemption,” the notice said.
In July 2015, the Labor Department tentatively denied QPAM exemption requests from Deutsche Bank and UBS for their money management units, but later granted temporary exemptions due to expire.
