Warren and Smith Ask Regulators To Deny Special Regulatory Favors for Credit Suisse
Proposed QPAM Exemption Would Release Credit Suisse from Federal Law Protecting Pensions and 401(k) Plans and Allow the Bank to Evade Accountability for Fraudulent Schemes
Washington, D.C. — United States Senators Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.), both members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Ali Khawar, the Acting Assistant Secretary at the Employee Benefits Security Administration (EBSA) in the Department of Labor (DOL), raising concerns about EBSA’s proposal to grant a one-year “qualified professional asset manager” (QPAM) exemption to Credit Suisse Group AG (Credit Suisse) despite 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” and its 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).” Federal law bars entities with recent convictions from managing clients’ retirement plans, but EBSA’s proposal would allow the bank to continue these lucrative activities while evading accountability for scamming investors and the government.
“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,” Senators Warren and Smith wrote. “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 currently considered to be a QPAM, which gives Credit Suisse the right to manage or transact with clients’ 401(k) and pension plans. Under EBSA regulations, however, a financial entity is prevented from retaining QPAM status if it has been convicted of criminal activity involving trust management. In 2015, EBSA granted Credit Suisse a 5-year exemption less than a year after its 2014 conviction.
“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.”
This letter is part of Senator Warren's ongoing efforts to hold giant corporations accountable for criminal, corporate misconduct.
- In April 2021, Senators Warren and Smith asked regulators to deny special regulatory favors for Goldman Sachs after the 1MDB scandal.
- In April 2019, Senator Warren introduced the Corporate Executive Accountability Act, which would hold executives of large corporations criminally responsible when their companies commit crimes, harm large numbers of Americans through civil violations, or repeatedly violate federal law.
- In May 2021, Senator Warren and Representative Pramila Jayapal (D-Wash.) released "Rigged Justice 2.0," the second in a series of reports on the failure of the federal government to hold corporate and white-collar criminals accountable. The first in the series was released in February of 2016.
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