A Goldman Sachs spokesman declined comment.
Sens. Warren and Smith noted that a financial entity is prevented from retaining the “qualified professional asset manager” status required to manage clients’ 401(k) and pension assets “if it has been convicted of criminal activity involving trust management.”
“Exempting corporations from consequences for misconduct and allowing Wall Street’s most powerful bad actors to continue business as usual flies in the face of the Department of Labor’s obligation to protect American workers and their retirement savings,” the letter said.
According to documents on the Department of Labor’s website, the department “has tentatively determined that the proposed exemption is in the interests of the participants and beneficiaries of the affected covered plans,” which would face considerable costs finding managers to replace Goldman if such an exemption were denied.
A decision not to exempt Goldman from the fallout of the criminal conviction of a group entity with no connection with its asset management units “would deprive the covered plans of the investment management services that these plans expected to receive when they appointed these managers, and could result in the termination of relationships that the fiduciaries of the covered plans have determined to be in the best interests of those plans,” according to the documents on the Department of Labor website.
Former senior employees of Goldman Sachs used a third-party intermediary to bribe high-ranking government officials in Malaysia and the Emirate of Abu Dhabi beginning in 2012, according to an October SEC order. Those bribes enabled Goldman Sachs to obtain lucrative business from 1MDB, including underwriting about $6.5 billion in bond offerings that earned Goldman Sachs more than $600 million in fees. The bond deals were supposed to support energy development projects but instead were used to pay $2.7 billion in bribes and kickbacks, among other things, government officials said.
Staff writer Hazel Bradford contributed to this report.