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Credit Suisse Gets Waiver to Continue US Pension Business

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Credit Suisse Group AGCS has been granted an exemption from the U.S. Department of Labor that will enable the Swiss banking giant to continue to offer asset management services to retirement plans, after its banking subsidiary Credit Suisse AG pleaded guilty to criminal charges of assisting its U.S. clients to evade tax last year.

Following the announcement on Thursday by the Department of Labor, Credit Suisse gained over 2% on the NYSE.

The May 2014 guilty plea also required the bank to shell out $2.8 billion as settlement charges to the U.S. authorities. The conviction judgment was entered in the U.S. District Court in Virginia on Nov 21, 2014. Notably, following guilty plea banks are required to receive waivers for continuing certain services such as the waiver from the Department of Labor to continue with pension management business in the U.S.

Credit Suisse had already received a temporary exemption, which is scheduled to expire next month. As per the new exemption, the company can now continue managing U.S. pension plans and individual retirement accounts as a Qualified Professional Asset Manager (QPAM), which will become effective on Nov 18, 2015, nearly one year following the criminal conviction.

The QPAM exemptions are usually effective for 10 years. However, for Credit Suisse, the period of 10 years is applicable for related managers in which Credit Suisse AG holds a direct or indirect stake of at least 5%. For wholly owned Credit Suisse affiliates, the exemption will remain effective for five years, beyond which the company is required to apply for new exemption.

According to the Department of Labor's decision, "The record contains no evidence that the Credit Suisse QPAMs were involved in the criminal activities that gave rise to the conviction."

The latest decision of the department, which considers a review that included a rare January hearing, is likely to draw criticism as U.S. regulators have been under pressure to strictly examine regulatory exemptions sought by financial giants with criminal convictions.

On the other hand, the decision certainly brings relief to the Zurich-based bank. According to a Credit Suisse spokesman "We are pleased that the Department of Labor has granted our (asset manager) exemption following a rigorous evaluation process, and we look forward to continuing to work on our clients' behalf."

In the May forex settlement, banks including Citigroup Inc. C , JPMorgan Chase & Co. JPM and UBS Group AG UBS that pleaded guilty also sought waivers from the Labor Department for their pension management business. However, according to a spokesperson of the Department of Labor, decisions on the exemptions are yet to be finalized.

Credit Suisse currently carries a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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