U.S. Sens. Elizabeth Warren (D-MA) and Tina Smith (D-MN) expressed concerns about the Employee Benefits Security Administration (EBSA) proposal to grant a one-year exemption to Credit Suisse Group AG.
The lawmakers took issue with the proposed “qualified professional asset manager” (QPAM) exemption for Credit Suisse given the bank’s impending conviction in an October 2021 judgment for “defrauding U.S. and international investors in the financing of an $850 million loan for a tuna fishing project in Mozambique.” It also had a previous 2014 conviction for “conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS).”
“The Department of Labor exists to protect American workers and their retirement savings from greed, corruption, and mismanagement. 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 that obligation to the public,” Warren and Smith wrote in a letter Ali Khawar, the acting assistant secretary at EBSA, which is part of the Department of Labor. “You have the opportunity to send a clear message that the federal government holds corporate criminals accountable for their misdeeds rather than shower them with special regulatory favors. We ask that you review and rescind this proposal.”
Credit Suisse is considered to be a QPAM, which gives it the right to manage or transact with clients’ 401(k) and pension plans. However, EBSA regulations prevent a financial institution from retaining QPAM status if it has been convicted of criminal activity involving trust management.
“We are concerned that this proposed QPAM exemption is just the latest example of a troubling pattern in which EBSA continues to grant regulatory favors for large banks that have been convicted of wrongdoing,” wrote the senators. “The agency must develop rules that mitigate these types of risks for workers if their QPAM is involved in illegal activity, not simply repeatedly refuse to enforce the law against large financial institutions that continually break financial laws.”