BNP Paribas can continue providing money management services to U.S. retirement plans, despite the parent company's June 2014 guilty plea to violating U.S. sanctions in several countries, said a notice published Wednesday by the Department of Labor in the Federal Register.
BNP Paribas Investment Partners managed $3.6 billion for U.S. institutional tax-exempt clients as of Dec. 31, 2014, including $1.2 billion in defined contribution assets. The company declined to comment on the exemption being granted.
Despite objections made by Public Citizen, an advocacy group, that companies with criminal convictions should not be granted exemptions, DOL officials said in the notice that conditions for the exemption “should promote adherence to strict fiduciary standards … and provide much or all of the deterrent effect that would have been achieved through outright denial.”
DOL officials have granted waivers for all 24 firms seeking individual waivers since 1997, with conditions specific to each case. For BNP Paribas, those conditions include making sure that none of the money management employees was involved in the criminal conduct or received compensation in connection with it, and that the criminal activity did not involve any ERISA-covered assets. BNP Paribas cannot influence any covered ERISA plan to engage BNP to service those funds, and must adopt procedures, audits and training to ensure that asset management decisions are conducted independently of BNP.
The exemption becomes effective when the parent company's criminal conviction is entered by the court. In addition to paying an $8.97 billion settlement with U.S. and New York state authorities, the firm added compliance measures and will clear dollars through a third-party bank.