Senator Warren calls on US Department of Labor to deny Credit Suisse exemption after bribery deal

  • Increased surveillance on the Swiss bank
  • Credit Suisse declined to comment.

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Feb 11 (Reuters) – U.S. Democratic Senators Elizabeth Warren and Tina Smith have asked the Labor Department to deny Swiss lender Credit Suisse Group AG (CSGN.S) a regulatory exemption related to its handling of pension funds following a a Justice Department ruling on bribery, according to a letter seen by Reuters on Friday.

The letter from Warren, one of the Senate’s most influential lawmakers, will bolster scrutiny of the Swiss bank, which is in the midst of a restructuring following a series of high-profile scandals.

The senators sent the letter on Thursday to Ali Khawar, acting assistant secretary of the Labor Department’s Employment Security Administration (ESBA), raising concerns about the ESBA’s proposal to grant a one-year exemption for “qualified professional asset managers” (QPAM). at Credit Suisse.

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The bank is currently considered a QPAM, which gives it the right to manage or process customers’ 401(k) and retirement plans. Under EBSA regulations, however, a financial entity cannot retain QPAM status if it has been convicted of criminal activities involving trust management.

The waiver would allow Credit Suisse to continue business as usual.

Credit Suisse declined to comment and EBSA did not immediately respond to a request for comment.

It has long been common for regulators to grant companies waivers of trade restrictions triggered by accusations of misconduct on the condition that they agree to a settlement. Democrats say the practice allows companies to continue to reoffend with little consequence.

“We urge you to reconsider and rescind this proposal, which would undermine efforts to hold Credit Suisse accountable for its unlawful behavior,” the senators wrote.

The letter cited an October 2021 global resolution the bank accepted for defrauding U.S. and international investors, and an earlier conviction from 2014, as reasons for denying the exemption.

Credit Suisse’s European subsidiary has pleaded guilty to defrauding investors of an $850 million loan to Mozambique to pay for a tuna fishing fleet, and is paying US and UK regulators $475 million to settle the deal under a deal announced in October.

Credit Suisse is fighting the problems on several fronts.

It lost $5.5bn when US family office Archegos Capital Management defaulted in March and was forced to freeze $10bn of supply chain finance funds in March when UK financier Greensill Capital collapsed.

And President Antonio Horta-Osorio quit abruptly last month following an internal investigation into his personal conduct.

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Reporting by Noor Zainab Hussain in Bengaluru; Editing by Leslie Adler and Jonathan Oatis

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