[Federal Register Volume 87, Number 75 (Tuesday, April 19, 2022)]
[Notices]
[Pages 23249-23264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08306]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2022-01; Exemption Application No. D-
12065]


Exemption for Certain Prohibited Transaction Restrictions 
Involving Credit Suisse Group AG (CSG or the Applicant), Located in 
Zurich, Switzerland

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

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SUMMARY: This document is a notice of exemption issued by the 
Department of Labor (the ``Department'') from certain of the prohibited 
transaction restrictions of the Employee Retirement Income Security Act 
of 1974 (``ERISA'') and the Internal Revenue Code of 1986 (the 
``Code''). The exemption allows entities with specified relationships 
to Credit Suisse AG (``CSAG'') and Credit Suisse Securities (Europe) 
Limited (``CSSEL'') to continue to rely on the exemptive relief 
provided by Prohibited Transaction Class Exemption 84-14, 
notwithstanding the judgments of conviction against CSAG and CSSEL, 
described below.

[[Page 23250]]


DATES: The exemption will be in effect for one year beginning on the 
date of conviction of Credit Suisse Securities (Europe) Limited in Case 
Number 1:21-cr-00520-WFK.

FOR FURTHER INFORMATION CONTACT: Erin Scott Hesse of the Department at 
(202) 693-8546. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On January 10, 2022, the Department 
published a notice of proposed exemption in the Federal Register \1\ 
for certain qualified professional asset managers within the corporate 
family of Credit Suisse Group AG (``CSG''), to continue relying on the 
class exemptive relief granted in Prohibited Transaction Exemption 
(PTE) 84-14 (``PTE 84-14''), for up to one year, notwithstanding the 
judgment of conviction against Credit Suisse AG (``CSAG'') and upcoming 
judgment of conviction against Credit Suisse Securities (Europe) 
Limited (``CSSEL''). The Department is granting this exemption to 
ensure that Covered Plans and their participants and beneficiaries are 
protected while the Department determines whether additional relief is 
warranted.\2\
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    \1\ 87 FR 1186 (Jan. 10, 2022).
    \2\ For purposes of this exemption, a ``Covered Plan'' is a plan 
subject to Part IV of Title I of ERISA (an ``ERISA-covered plan'') 
or a plan subject to Code section 4975 (an ``IRA''), in each case, 
with respect to which a CS Affiliated QPAM relies on PTE 84-14, or 
with respect to which a CS Affiliated QPAM (or any CSAG affiliate) 
has expressly represented that the manager qualifies as a QPAM or 
relies on PTE 84-14. A Covered Plan does not include an ERISA-
covered plan or IRA to the extent the CS Affiliated QPAM has 
expressly disclaimed reliance on QPAM status or PTE 84-14 in 
entering into a contract, arrangement, or agreement with the ERISA-
covered plan or IRA. Notwithstanding the above, a CS Affiliated QPAM 
may disclaim reliance on QPAM status or PTE 84-14 in a written 
modification of a contract, arrangement, or agreement with an ERISA-
covered plan or IRA, where: The modification is made in a bilateral 
document signed by the client; the client's attention is 
specifically directed toward the disclaimer; and the client is 
advised in writing that, with respect to any transaction involving 
the client's assets, the CS Affiliated QPAM will not represent that 
it is a QPAM, and will not rely on the relief described in PTE 84-
14.
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    The Department stresses that this exemption provides Covered Plans 
and CS Affiliated QPAMs with the ability to rely on PTE 84-14 for one 
year and that this exemption will terminate at the end of that period. 
The grant of this one-year exemption does not imply that the Department 
will grant additional relief for the CS Affiliated QPAMs to continue to 
rely on the relief in PTE 84-14 beyond the end of this exemption's one-
year term. The Convictions and other alleged Credit Suisse-related 
criminal misconduct constitute serious years-long systemic criminal 
misconduct that counsels against providing broad relief from ERISA's 
prohibited transaction provisions and raises fundamental questions 
regarding whether the CS Affiliated QPAMs have sufficient integrity to 
warrant their continued reliance on PTE 84-14.
    This exemption provides only the relief specified in the text of 
the exemption, and only with respect to the criminal convictions or 
criminal conduct described herein. It provides no relief from 
violations of any law other than the prohibited transaction provisions 
of Title I of ERISA and the Code.
    The Department intends for the terms of this exemption to promote 
adherence by the CS Affiliated QPAMs to basic fiduciary standards under 
Title I of ERISA and the Code. The Department's primary objective in 
granting this exemption is to ensure that Covered Plans can terminate 
their relationships with a CS Affiliated QPAM in an orderly and cost-
effective fashion in the event the fiduciary of a Covered Plan 
determines it is prudent to do so. The Department makes the requisite 
findings under ERISA section 408(a) and Code Section 4975(c)(2) based 
on the Applicant's adherence to all the conditions of the exemption. 
Accordingly, affected parties should be aware that the conditions 
incorporated in this exemption are, taken as a whole, necessary for the 
Department to grant the relief requested by the Applicant. Absent these 
or similar conditions, the Department would not have granted this 
exemption.
    The Applicant requested an individual exemption pursuant to ERISA 
section 408(a) and Code section 4975(c)(2), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (76 FR 66637, 
66644, October 27, 2011). Effective December 31, 1978, section 102 of 
the Reorganization Plan No. 4 of 1978, 5 U.S.C. app. 1 (1996), 
transferred the authority of the Secretary of the Treasury to issue 
administrative exemptions under Code section 4975(c)(2) to the 
Secretary of Labor. Accordingly, the Department grants this exemption 
under its sole authority.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption (the ``Proposal''). In this regard, the 
Applicant was given ten (10) days to provide notice to interested 
persons, and all comments and requests for a hearing were due on 
February 22, 2022. The Department received two written comments and no 
hearing requests. One comment was from the Applicant, as discussed in 
more detail below. The other comment was from Senators Elizabeth Warren 
and Tina Smith urging the Department to reconsider and rescind the 
Proposal. After considering the entire record developed in connection 
with the Applicant's exemption request, the Department has determined 
to grant the one-year exemption to ensure that affected plans and their 
participants are protected, as described below.

Department's Comment

    The Department cautions that the relief in this exemption will 
terminate immediately if an entity within the CSG corporate structure 
is convicted of a crime described in Section I(g) of PTE 84-14 (other 
than the judgment of conviction against CSAG and upcoming judgment of 
conviction against CSSEL, as further defined below) during the 
Exemption Period. Although the CS Affiliated and Related QPAMs could 
apply for a new exemption in that circumstance, the Department would 
not be obligated to grant the exemption. The Department designed the 
terms of this exemption to permit plans to terminate their 
relationships in an orderly and cost-effective fashion. Nothing in this 
exemption should be construed to suggest that the Department will grant 
further relief after the expiration of this one-year exemption. In this 
regard, the CS Affiliated QPAMs must manage the assets of Covered Plan 
clients consistent with this understanding and in accordance with their 
fiduciary obligations under ERISA and the conditions of this one-year 
exemption. The Department stresses that complying with their fiduciary 
obligations means that the CS Affiliated QPAMs' should advise their 
plan and IRA clients to prepare for the possibility that the Department 
will not grant further relief at the end of the one-year period and the 
ensuing consequences. This also means that the QPAMs should take the 
necessary and appropriate steps to ensure their Covered Plan clients 
will not be exposed to prohibited transactions and that the QPAMs have 
prudent processes in place to comply with the penalty-free withdrawal 
and indemnification requirements set forth in Section I(j) of PTE 2019-
07 and Section III(j) of this exemption.
    Below, the Department provides the overview of the relevant 
convictions, which was published in the

[[Page 23251]]

Department's notice of proposed exemption.\3\
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    \3\ 87 FR 1186 (Jan. 10, 2022).
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Prior 2014 Conviction of CSAG (the CSAG Conviction) and Related 
Exemptions

The CSAG Conviction
    On May 19, 2014, the Tax Division of the United States Department 
of Justice (DOJ) and the U.S. Attorney's Office for the Eastern 
District of Virginia filed a one-count criminal information (the CSAG 
Information) in the District Court for the Eastern District of Virginia 
(the Virginia District Court) charging CSAG with a conspiracy to 
violate Code section 7206(2) in violation of Title 18, United States 
Code, Section 371. The CSAG Information charged the Applicant and its 
subsidiaries, Credit Suisse Fides and Clariden Leu Ltd., with willfully 
aiding, assisting in, procuring, counseling, and advising the 
preparation and presentation of false income tax returns and other 
documents to the Internal Revenue Service of the Treasury Department 
(IRS), for decades, prior to and through approximately 2009.
    According to the Statement of Facts filed in the criminal case (the 
CSAG Statement of Facts), for decades before and through approximately 
2009, CSAG operated an illegal cross-border banking business that 
knowingly and willfully aided and assisted thousands of U.S. clients in 
opening and maintaining undeclared accounts concealing their offshore 
assets and income from the IRS. Private bankers employed by CSAG 
(referred to as Relationship Managers or RMs) served as the primary 
contact for U.S. clients with undeclared accounts at CSAG. CSAG used a 
variety of means to assist U.S. clients in concealing their undeclared 
accounts, including by: Assisting clients in using sham entities as 
nominee beneficial owners of the undeclared accounts; soliciting IRS 
forms that falsely stated under penalty of perjury that the sham 
entities beneficially owned the assets in the accounts; failing to 
maintain records in the United States related to the accounts; 
destroying account records sent to the United States for client review; 
using Credit Suisse \4\ managers and employees as unregistered 
investment advisors on undeclared accounts; facilitating withdrawals of 
funds from undeclared accounts by either providing hand-delivered cash 
in the United States or using Credit Suisse's correspondent bank 
accounts in the United States; structuring transfers of funds to evade 
currency transaction reporting requirements; and providing offshore 
credit and debit cards to repatriate funds in the undeclared accounts.
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    \4\ The CSAG Statement of Facts defined ``Credit Suisse'' to 
mean CSAG, its parent, and Switzerland-based subsidiaries and 
affiliates, including Clariden Leu.
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    CSAG made a number of ineffectual attempts to consolidate these 
U.S. clients' accounts in CSAG business entities that complied with 
U.S. law. For instance, starting in or about 2009, CSAG engaged in a 
flawed process of verifying tax compliance of U.S. accounts in order to 
allow these accounts to remain at CSAG. In December 2010, the Tax 
Division of the U.S. Department of Justice (DOJ) informed Credit Suisse 
AG that it had begun a criminal investigation of CSAG that had 
uncovered evidence of tax law violations. Although CSAG had either 
transferred or terminated the majority of its relationships with these 
U.S. clients by approximately 2010, CSAG continued to identify U.S. 
customer accounts for closure until on or about 2013.
    On May 19, 2014, pursuant to a plea agreement (the CSAG Plea 
Agreement), CSAG entered a plea of guilty for assisting U.S. citizens 
in federal income tax evasion. The conviction (the CSAG Conviction) 
occurred on November 21, 2014.
Related Individual Exemptions
    In connection with the CSAG Conviction, the Department first 
granted PTE 2014-11,\5\ a one-year exemption that allowed CS Affiliated 
and Related QPAMs to continue to rely on PTE 84-14, notwithstanding the 
CSAG Conviction, as long as a number of conditions were met. Subsequent 
to granting PTE 2014-11, the Department granted PTE 2015-14, an 
additional four-year exemption that continued to provide extended 
relief for CS Affiliated QPAMs.\6\ Before the expiration of PTE 2015-
14, the Department granted PTE 2019-07, which would have provided the 
final five-years of relief CS Affiliated needed in connection with the 
CSAG Conviction.\7\
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    \5\ 79 FR 68716 (Nov. 18, 2014).
    \6\ 80 FR 59817 (Oct. 2, 2015). PTE 2015-14 provided relief to 
the CS Related QPAMs for the entire remainder of the ineligibility 
period.
    \7\ See 84 FR 61928 (Nov. 14, 2019).
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Impending Conviction of CSSEL (the CSSEL Conviction) and CSG Deferred 
Prosecution Agreement (DPA)

The CSSEL Conviction
    On October 19, 2021, the DOJ, Criminal Division, Money Laundering 
and Asset Recovery Section and Fraud Section, and the United States 
Attorney's Office for the Eastern District of New York (collectively, 
the Offices), filed a criminal information (the CSSEL Information) in 
the District Court for the Eastern District of New York (the New York 
District Court) charging CSSEL with one count of conspiracy to commit 
wire fraud in violation of 18 U.S.C. 1349. As of the date of this 
publication, the CSSEL sentencing date is scheduled for May 13, 2022.
    CSSEL agreed to resolve the action through a plea agreement 
presented to the New York District Court on October 19, 2021 (the CSSEL 
Plea Agreement). Under the CSSEL Plea Agreement, CSSEL agreed to enter 
a plea of guilty to the charge set out in the CSSEL Information (the 
CSSEL Plea). In addition, CSSEL will make an admission of guilt to the 
District Court. The Applicant expects that the District Court will 
enter a judgment against CSSEL that will require remedies that are 
materially the same as those set forth in the CSSEL Plea Agreement. On 
October 19, 2021, in connection with the CSSEL Plea, the ultimate 
parent of CSSEL, CSG, entered into a Deferred Prosecution Agreement 
(the DPA) with the Criminal Division, Money Laundering and Asset 
Recovery Section and Fraud Section of the DOJ and the United States 
Attorney's Office for the Eastern District of New York.
    For purposes of Section I(g) of PTE 84-14, the date CSSEL is 
sentenced will be the conviction date (the CSSEL Conviction Date). As 
of that date, absent this exemption, the CS Affiliated and Related 
QPAMs will no longer be able to rely on the relief provided by PTE 84-
14 as of the CSSEL Conviction Date. The CSSEL Conviction will also 
violate PTE 2019-07 and therefore, absent this exemption, the CS 
Affiliated and Related QPAMs will no longer be able to rely on the 
relief provided by either PTE 84-14 or PTE 2019-07 as of the CSSEL 
Conviction Date.
    According to the Statement of Facts (the CSSEL Statement of Facts) 
\8\ that

[[Page 23252]]

accompanied the CSSEL Plea Agreement,\9\ CSSEL acted as a Joint Lead 
Manager underwriting the issuance of $500 million in loan participation 
notes (LPNs) to partially finance an $850 million loan for a tuna 
fishing project in Mozambique in 2013, and acted as Joint Dealer 
Manager in the exchange of those LPNs for a sovereign bond (EMATUM \10\ 
Exchange) (collectively, the EMATUM Securities) in 2016.
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    \8\ Unless otherwise specified, all information in this section 
is taken from the Applicant's exemption application and supporting 
documents, the CSSEL Plea Agreement, and the CSSEL Statement of 
Facts. According to the CSSEL Plea Agreement ``[t]he Defendant is 
pleading guilty because it is guilty of the charge contained in the 
Information. The Defendant admits, agrees, and stipulates that the 
factual allegations set forth in the Information and the Statement 
of Facts are true and correct, that it is responsible for the acts 
of its officers, directors, employees, and agents described in the 
Information and the Statement of Facts, and that the Information and 
the Statement of Facts accurately reflect the Defendant's criminal 
conduct.'' P. 11. Additionally, as part of the CSSEL Plea Agreement, 
the Defendant ``expressly agrees that it shall not, through present 
or future attorneys, officers, directors, employees, agents or any 
other person authorized to speak for the Defendant make any public 
statement, in litigation or otherwise, contradicting the acceptance 
of responsibility by the Defendant set forth above or the facts 
described in the Information and the Statement of Facts.'' P. 23.
    \9\ Plea Agreement entered into between the United States of 
America, by and through the United States Department of Justice, 
Criminal Division, Money Laundering and Asset Recovery Section and 
Fraud Section, and the United States Attorney's Office for the 
Eastern District of New York and Credit Suisse Securities (Europe) 
Limited, Cr. No. 21-520 (MKB), filed Oct. 19, 2021.
    \10\ EMATUM was a company owned, controlled, and overseen by the 
Government of Mozambique. EMATUM was created to undertake a project 
to create a state-owned tuna fishing company for Mozambique.
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    CSSEL, through its employees, conspired to use U.S. wires and the 
U.S. financial system to defraud U.S. and international investors. 
Credit Suisse \11\ and its co-conspirators conspired to use 
international and interstate wires to, from, and through the United 
States to transmit false and misleading statements to investors in the 
EMATUM Securities, transfer proceeds obtained from those investors 
through the fraudulent scheme to the co-conspirators, and pay kickbacks 
to three former Credit Suisse bankers.
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    \11\ The CSSEL Statement of facts defined ``Credit Suisse'' to 
mean CSG together with its wholly-owned subsidiaries and affiliated 
entities.
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    CSSEL, through Surjan Singh (Singh), who left Credit Suisse in 
2017, and Andrew Pearse (Pearse) and Detelina Subeva (Subeva), who both 
left Credit Suisse in 2013, among other things, conspired to defraud 
investors and potential investors in the EMATUM Securities by 
concealing and misrepresenting the fact that approximately $50 million 
in kickbacks were paid to Pearse, Singh, and Subeva from the loan 
proceeds of the EMATUM LPN transaction. Jean Boustani, an agent of 
Privinvest,\12\ an entity not affiliated with Credit Suisse, paid 
bribes totaling approximately $150 million to various Mozambican 
government officials and others, including Manuel Chang, Mozambique's 
Minister of Finance, and Antonio do Rosario, an official in 
Mozambique's governmental state intelligence and security service, 
known as Servico de Informacoes e Seguranca do Estado, which, together 
with other Mozambican government agencies, was an owner of ProIndicus 
\13\ and EMATUM.
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    \12\ Privinvest was a holding company based in Abu Dhabi, United 
Arab Emirates. Privinvest was engaged in shipbuilding of various 
types of vessels.
    \13\ ProIndicus was a company owned, controlled, and overseen by 
the Government of Mozambique. ProIndicus was created to undertake a 
project to create a state-owned coastal surveillance and protection 
plan for Mozambique.
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    Credit Suisse also arranged the EMATUM Exchange, whereby, in 2015, 
when EMATUM began encountering problems servicing the EMATUM loans, 
Credit Suisse arranged for the LPNs to be exchanged for Mozambique-
issued Eurobonds. According to the Statement of Facts, in seeking 
investors' consent to the EMATUM Exchange, CSSEL prepared documents 
about the EMATUM Exchange that were sent to investors and included 
false and misleading statements regarding the use of proceeds of the 
original EMATUM loan and omitted certain other facts concerning the 
EMATUM Exchange. Credit Suisse ignored or only nominally addressed a 
number of red flags in connection with these transactions.
    On or about August 30, 2013, Credit Suisse agreed to move forward 
with the EMATUM transaction. In addition to Credit Risk Management, the 
European Investment Banking Committee, Reputational Risk, and the 
Compliance and Anti-Money Laundering functions considered the 
transaction and agreed to allow the EMATUM transaction to go forward. 
The CSSEL Statement of Facts indicates that after Credit Suisse 
transferred the funds raised to finance EMATUM to Privinvest, 
Privinvest secretly paid millions of dollars to three of the 
signatories on the EMATUM deal--Singh, Do Rosario, and Chang.
    Credit Suisse approved the EMATUM loan notwithstanding the fact 
that its earlier due diligence process for ProIndicus had identified 
significant risks of bribery and the size of the project had expanded 
greatly without apparent justification, and Credit Suisse, through 
Pearse, Singh, and Subeva, knew that Privinvest had paid kickbacks to 
Pearse in connection with the ProIndicus transaction, and would pay 
further kickbacks to Pearse and Singh in connection with the EMATUM 
loan.
    Credit Suisse sent potential investors materials that included the 
EMATUM loan agreement and marketing materials such as the offering 
circular (the LPN Investor Documents), notwithstanding the fact that 
the LPN Investor Documents represented that the loan proceeds would be 
used exclusively to fund the EMATUM project, and that none of the 
proceeds would be used to pay bribes or kickbacks. For example, (a) 
Pearse and Singh knew that they would receive millions of dollars in 
illegal kickback payments from Privinvest in connection with the EMATUM 
loan while employed by Credit Suisse; (b) Firm 1 had expressly warned 
Credit Suisse about Privinvest and Privinvest Co-Conspirator 1's 
history of corruption and bribery; and (c) a senior Credit Suisse 
executive had previously said ``no'' to Pearse to the combination of 
Privinvest Co-Conspirator 1 and Mozambique in November 2012.\14\
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    \14\ The CSSEL Statement of Facts did not identify Privinvest 
Co-conspirator 1 or Firm 1 other than that Firm 1 was a ``diligence 
firm'' used by Credit Suisse.
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    Despite the use of proceeds concerns raised by the significant 
valuation shortfall and other previously identified red flags, which 
underscored the risk that the EMATUM proceeds had been used for 
corruption and bribery, Credit Suisse approved the EMATUM Exchange. 
Although Credit Suisse did disclose in investor documents that it had 
been ``widely reported in the press that the proceeds of the [LPNs] had 
been used in part to purchase defense equipment,'' and that 
``subsequent press reports [had] also called into question whether all 
of the proceeds of the [LPNs] were used for authorized or appropriate 
purposes,'' Credit Suisse did not disclose any of the information it 
had about the significant shortfall between the price Privinvest 
charged EMATUM for the purchase of assets and the value of those 
assets. In the EMATUM Exchange documentation, Credit Suisse also: (a) 
Included false and misleading statements regarding the use of proceeds 
of the original EMATUM loans; (b) failed to disclose kickbacks to 
Singh, Pearse, and Subeva, of which Singh was aware; (c) did not 
disclose any of the information Credit Suisse had about the significant 
shortfall between the price Privinvest charged EMATUM for the 27 boats 
and the fair market value of those boats; and (d) failed to disclose 
the existence of the ProIndicus and MAM loans,\15\ and their maturity 
dates, and instead disclosed that Credit Suisse and VTB Bank ``have 
engaged, and may in the future engage, in investment banking and/or 
commercial banking transactions with, and have performed and continue 
to perform services for the Issuer and its affiliates in the ordinary 
course of business for which they have received and for which

[[Page 23253]]

they will in the future receive, fees. . . . In particular, an 
affiliate of [CSSEL] has a lending relationship with a wholly-owned 
state entity whose obligations have the benefit of a guarantee from 
Mozambique.'' Credit Suisse did disclose, however, that it had been 
``widely reported in the press that the proceeds of the [LPNs] had been 
used in part to purchase defense equipment,'' and that ``subsequent 
press reports [had] also called into question whether all of the 
proceeds of the [LPNs] were used for authorized or appropriate 
purposes.''
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    \15\ MAM was a company owned, controlled, and overseen by the 
Government of Mozambique. MAM was created to build and maintain 
shipyards.
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    By agreeing to the EMATUM Exchange, which delayed the EMATUM loan 
repayment date, Credit Suisse knew that EMATUM loan participation note 
investors were agreeing to be paid after any other investors in other 
Mozambique government loans that matured earlier, such as ProIndicus. 
Credit Suisse arranged and was an investor in the ProIndicus loan. As a 
result, by extending the EMATUM loan repayment date through the EMATUM 
Exchange, Credit Suisse would be repaid on its investment in the 
private ProIndicus loan before EMATUM Securities investors were repaid.
    During the investor road show for the EMATUM Exchange, Credit 
Suisse and Do Rosario and the then-Minister of Finance for Mozambique 
did not inform investors of (a) the significant valuation shortfall and 
risk that loan proceeds were improperly diverted, including to pay 
bribes; (b) the existence or maturity dates of the ProIndicus and MAM 
loans; (c) that Mozambique had not disclosed its true level of debt to 
the ProIndicus and MAM loans to the International Monetary Fund (IMF); 
and (d) kickbacks paid to Credit Suisse bankers in connection with the 
EMATUM loan.
    Under the CSSEL Plea Agreement, CSSEL agreed, among other things, 
as follows: First, that CSSEL shall cooperate fully with the Offices in 
any and all matters relating to the conduct described in the CSSEL Plea 
Agreement and the CSSEL Statement of Facts and other conduct under 
investigation by the Offices or any other component of the Department 
of Justice at any time during the term of the DPA (the Term) until the 
later of the date upon which all investigations and prosecutions 
arising out of such conduct are concluded or the end of the Term. 
Second, at the request of the Offices, CSSEL shall also cooperate fully 
with other domestic or foreign law enforcement and regulatory 
authorities and agencies, as well as the Multilateral Development Banks 
in any investigation of CSSEL, CSG, its affiliates, or any of its 
present or former officers, directors, employees, agents, and 
consultants, or any other party, in any and all matters relating to the 
conduct described in the CSSEL Plea Agreement and the CSSEL Statement 
of Facts and any other conduct under investigation by the Offices or 
any other component of the DOJ. Third, should CSSEL learn during the 
Term of any evidence or allegations of conduct that may constitute a 
violation of the federal wire fraud statute had the conduct occurred 
within the jurisdiction of the United States, CSSEL shall promptly 
report such evidence or allegation to the Offices. CSSEL also agreed to 
commit no further crimes and to work with Credit Suisse in fulfilling 
the obligations of CSG's DPA.
Impacted Investors
    The Applicant represented to the Department that the LPNs were 
distributed from Credit Suisse's UK operations via CSSEL into 
international capital markets in 2013, to non-U.S. entities, pursuant 
to U.S. Securities and Exchange Commission (SEC) Regulation S. Credit 
Suisse is aware that the purchasers of those LPNs were made up of hedge 
funds, banks, and other institutions, but due to Regulation S, the 
purchasers' only obligation was to certify their status as Qualified 
Institutional Buyers (QIBs) in the applicable subscription agreements. 
The Applicant represents that it is unlikely that Covered Plans were 
initial purchasers of those LPNs. According to the Applicant, Credit 
Suisse has no way of knowing, and does not know in any systematic 
manner, whether (a) the fund owners or investors in the initial 
purchasers' funds themselves were Covered Plans, or (b) parties buying 
and selling the LPNs in the secondary market were Covered Plans.
    Furthermore, the Applicant represented that in 2016, LPN investors 
had the option to exchange their LPNs for sovereign-issued Mozambique 
Exchange Bonds (the Exchange Bonds) issued under either Regulation S or 
SEC Rule 144A, in London, England. Credit Suisse represents that it is 
unlikely that those investors who chose to exchange their LPNs for 
Regulation S bonds, and who must have been QIBs and non-U.S. entities, 
were Covered Plans. The 2016 Exchange also included a Rule 144A tranche 
into which investors could exchange their LPNs; however, those buyers 
also were required to represent that they were QIBs, and as a result, 
it is unlikely that their clients were Covered Plans. According to the 
information on purchasers which Credit Suisse does have, at the time of 
the Exchange, Credit Suisse was aware that the LPNs, and subsequently, 
the Eurobonds, were held via either Euroclear or Clearstream accounts 
in Europe. While Credit Suisse has identified a list of the entities 
that maintained custodial accounts at Euroclear and Clearstream in 
connection with those transactions, Credit Suisse represents that it 
has no way of knowing the identities of the ultimate beneficial owners 
of the LPNs at the time of the Exchange.
The CSG DPA
    On October 19, 2021, in addition to the CSSEL Plea, the ultimate 
parent entity of CSSEL, CSG, entered into a three-year DPA with the 
Offices in connection with the same conduct as set forth in the CSSEL 
Statement of Facts that forms the basis for the CSSEL Plea Agreement.
    The DPA indicates that CSG admits, accepts, and acknowledges that 
it is responsible under United States law for the acts of its officers, 
directors, employees, and agents as charged in the CSSEL Information, 
and as set forth in the CSSEL Statement of Facts, and that the 
allegations described in the CSSEL Information and the facts described 
in the CSSEL Statement of Facts are true and accurate.
    Under the DPA, CSG also agreed to continue to cooperate with the 
Offices, to enhance its compliance program and internal controls, and 
to provide enhanced reporting to the Offices on CSG's remediation and 
compliance program. Among other things, the enhanced reporting 
provisions require CSG to meet with the Offices at least quarterly and 
to submit yearly reports regarding the status of its remediation 
efforts, the results of its testing of its compliance program, and its 
proposals to ensure that its compliance program is reasonably designed, 
implemented, and enforced so that it is effective in deterring and 
detecting violations of fraud, money laundering, the Foreign Corrupt 
Practices Act, and other applicable anti-corruption laws.
    Department's Note: Interested persons can access the CSG DPA and 
related materials at https://www.justice.gov/opa/pr/credit-suisse-resolves-fraudulent-mozambique-loan-case-547-million-coordinated-global.

Comments From the Applicant--Requested Revisions

I. Revision to Section I(b)

    Section I(b) of the Proposal provides:

    The term ``Covered Plan'' means a plan subject to Part IV of 
Title I of ERISA (an ``ERISA-covered plan'') or a plan subject to 
Code section 4975 (an ``IRA''), in each case, with respect to which 
a CS Affiliated QPAM

[[Page 23254]]

relies on PTE 84-14, or with respect to which a CS Affiliated QPAM 
(or any CSAG affiliate) has expressly represented that the manager 
qualifies as a QPAM or relies on the QPAM class exemption (PTE 84-
14). A Covered Plan does not include an ERISA-covered plan or IRA to 
the extent the CS Affiliated QPAM has expressly disclaimed reliance 
on QPAM status or PTE 84-14 in entering into a contract, 
arrangement, or agreement with the ERISA-covered plan or IRA.

    Applicant's Request: The Applicant requested clarification that a 
disclaimer of reliance on QPAM status or PTE 84-14 may be made in a 
modification of a contract, arrangement, or agreement with an ERISA-
covered plan or IRA, assuming a bilateral signed document exists, and 
the client is advised in writing what it means not to use the QPAM 
Exemption. According to the Applicant, if the agreement is bilateral 
and in writing, and the client's attention is specifically directed 
toward the disclaimer, the Applicant is hopeful that the Department 
will deem these conditions sufficiently protective to permit the CS 
Affiliated QPAMs to disclaim reliance on QPAM status or PTE 84-14 in a 
modification of a contract, arrangement, or agreement. Accordingly, the 
Applicant requested the following additional language be added to the 
end of Section I(b):

    Notwithstanding the above, a CS Affiliated QPAM may disclaim 
reliance on QPAM status or PTE 84-14 in a written modification of a 
contract, arrangement, or agreement with an ERISA-covered plan or 
IRA, where: The modification is made in a bilateral document signed 
by the client; the client's attention is specifically directed 
toward the disclaimer; and the client is advised in writing that, 
with respect to any transaction involving the client's assets, the 
CS Affiliated QPAM will not represent that it is a QPAM, and will 
not rely on the relief described in PTE 84-14.

    Department's Response: The Department has revised the exemption 
consistent with the Applicant's request.

II. Revision to Section III(i)(8)

    Section III(i)(8) of the Proposal provides, in pertinent part:

    A copy of the Audit Report must be provided [to] CSAG's Board of 
Directors and either the Risk Committee or the Audit Committee of 
CSAG's Board of Directors; and a senior executive officer at either 
the Risk Committee or the Conduct and Financial Crime Control 
Committee must review the Audit Report for each CS Affiliated QPAM 
and must certify in writing, under penalty of perjury, that such 
officer has reviewed each Audit Report.

    Applicant's Request: The Applicant requested that the Department 
permit certification by the Risk Committee or the Audit Committee, 
rather than the Conduct and Financial Crime Control Committee. As 
represented by the Applicant, the Audit Committee is uniquely 
positioned to receive and review the Audit Report, as its specified 
function is to assist the Board of Directors in fulfilling its 
oversight role by monitoring and assessing the integrity of Credit 
Suisse's financial statements. Among the particular responsibilities of 
the Audit Committee is monitoring the qualifications, independence, and 
performance of external auditors such as the Independent Auditor 
required by the Proposal. The Conduct and Financial Crime Control 
Committee does not serve a comparable purpose. Its function is solely 
to manage Credit Suisse's exposure to financial crime risk. The 
Applicant submitted that the Audit Committee is better suited to 
fulfill the objectives of the exemption condition. Accordingly, the 
Applicant requested that the reference to the Conduct and Financial 
Crime Control Committee be replaced with the Audit Committee. In 
addition, to the extent that these committees include only independent 
Board members and not executive employees, the Applicant requested that 
certification be permitted by the chairperson of the committee or the 
senior executive officer who acts as liaison with the committee.
    Department's Response: The Department has revised the exemption 
consistent with the Applicant's request including so that the 
chairperson of a committee may provide the certification.

III. Revision to Section III(j)(7)

    Section III(j)(7) of the Proposal provides, in relevant part:

    For Covered Plans that were provided a previous form of 
investment management agreement prior to the effective date of this 
exemption, and sign and return such agreement with a CS Affiliated 
QPAM within 120 days after the effective date of this exemption, the 
CS Affiliated QPAM shall provide the documents required by this 
subsection (j) within ten (10) business days after receipt of the 
signed agreement. This condition will be deemed met for each Covered 
Plan that received a notice pursuant to PTE 2019-07 that meets the 
terms of this condition.

    Applicant's Request: The Applicant requested clarification with 
respect to Section III(j)(7), which is intended to deal with new 
clients of a CS Affiliated QPAM who were provided an investment 
management agreement shortly before or after the Proposal was 
published, but in all cases prior to the effective date of the 
exemption, if granted. The Applicant requests that where that version 
requires modification to meet the terms of the exemption, the CS 
Affiliated QPAM may provide amendments required by the exemption that 
need not be signed, along with the documents required by the exemption.
    The Applicant requested that this part of Section III(j)(7) read:

    For new Covered Plans that were provided an investment 
management agreement prior to the effective date of this exemption, 
returning it within 120 days after the effective date of this 
exemption, and that signed investment management agreement requires 
amendment to meet the terms of the exemption, the CS Affiliated QPAM 
may provide the new Covered Plan with amendments that need not be 
signed with any documents required by this subsection (j) within ten 
(10) business days after receipt of the signed agreement. This 
condition will be deemed met for each Covered Plan that received a 
notice pursuant to PTE 2019-07 that meets the terms of this 
condition.

    The Applicant states that handling asset management agreements in 
this manner will save affected plans time and money.
    Department's Response: The Department has revised the exemption as 
requested.

IV. Revision to Section III(o)

    Proposed Section III(o) provides ``CSAG complies in all material 
respects with the requirements imposed by a U.S regulatory authority in 
connection with the Convictions.''
    Applicant's Request: The Applicant requests that this condition be 
deleted. The Applicant indicated that a number of regulators have 
imposed myriad requirements as part of CSAG's plea agreements and 
settlements entered into in connection with the Convictions, which are 
described in detail in the Applicant's application for exemptive relief 
(dated October 19, 2021) and the Applicant's response to the 
Department's additional questions (dated December 9, 2021). The 
Applicant indicated that conditioning an administrative exemption upon 
CSAG's compliance with all such requirements does not further the 
objectives of the exemption and, indeed, could have a significant 
adverse effect on plans. If CSAG were to fail to meet a minor or 
ministerial requirement, the exemption would be lost to plans, 
regardless of whether the regulator chose to deal with the failure in a 
different, and less draconian, fashion. The Applicant indicated that 
the CS Affiliated QPAMs have no control over CSAG and cannot ensure its 
compliance with requirements imposed by other regulators. As stated by 
the Applicant, the exemption makes the CS Affiliated QPAMs responsible 
for their own

[[Page 23255]]

compliance with the exemption, not for the compliance with all other 
laws by the rest of Credit Suisse. The Applicant believes that plans 
and their fiduciaries should not pay the price for any noncompliance by 
the non-asset management divisions of Credit Suisse.
    The Applicant also contends that this kind of provision could have 
unintended consequences. In support of that contention, the Applicant 
indicated that: (1) Any claim by a disgruntled client or employee, or a 
competitor, that even the most minor requirements of these ancillary 
orders were not met may throw the validity of the exemption into doubt, 
causing disruption to the trading with respect to Covered Plans, and 
(2) this kind of condition, without notice and hearing, creates the 
sort of cliff effect that the Department has sought to avoid. Loss, by 
plans, of this trading exemption for failure by a non-asset management 
part of Credit Suisse to comply with this condition would serve only to 
penalize plans for conduct that is outside their managers' control.
    The Applicant added that loss of the exemption would be automatic 
upon CSAG's failure to comply with a regulatory requirement. By 
contrast, regulators have a broad range of potential responses to a 
failure by CSAG or a non-asset management affiliate to comply with its 
terms. Each regulator has mechanisms at its disposal, short of 
nullifying the terms of the agreement, to ensure CSAG's compliance with 
requirements imposed by that regulator and to monitor satisfaction of 
them.
    The Applicant further explained that there are also bodies of 
practice and precedent within other regulatory agencies, which allow 
for effective but modulated enforcement responses in the event of a 
putative technical breach, that are inconsistent with the 
unintentionally severe nature of this proposed QPAM condition. For 
example, the responsible regulator may elect to enforce an agreement 
without disturbing the agreement itself--for example, requiring 
specific performance but leaving the plea agreement or other settlement 
intact--whereas this QPAM individual exemption would terminate 
immediately upon CSAG's failure to comply. In the Applicant's words, 
such a severe result would not be in the interest of or protective of 
plans and their participants, and, accordingly, the Applicant requested 
that the condition be deleted from the final exemption. Alternatively, 
the Applicant requested that if the Department decides to retain this 
provision in a final exemption, that it be limited to the conditions of 
the plea agreement between CSAG and the Department of Justice.
    Department's Response: The Department is not revising the condition 
as requested. The Department views CSAG's compliance in all material 
respects with the requirements imposed by a U.S. regulatory authority 
in connection with the Convictions as indicative of whether CSAG is 
acting in accordance with U.S-mandated requirements, after years of 
failing to abide by U.S. laws.
    However, given the possible costs to Covered Plans that may arise 
if the CS Affiliated QPAMs were to suddenly no longer able to rely on 
PTE 84-14, the Department has revised the proposed language to provide 
that, ``Relief in this exemption will terminate on the date that is six 
months following the date that a U.S. regulatory authority makes a 
final decision that CSAG failed to comply in all material respects with 
any requirement imposed by such regulatory authority in connection with 
the Convictions.
    Importantly, the Department disagrees with the Applicant's 
characterization that ``the exemption makes the CS Affiliated QPAMs 
responsible for their own compliance with the exemption, not for the 
compliance with all other laws by the rest of Credit Suisse.'' This 
individual exemption is primarily focused on the CS Affiliated QPAMs' 
compliance with the exemption. The Applicant's statement, however, 
ignores the broader purpose and scope of Section I(g), which is 
precisely why this individual exemption is needed. This individual 
exemption is needed because the Applicant will no longer be able to 
rely upon PTE 2019-07 or use PTE 84-14 once the CSSEL Conviction 
occurs. The terms of this exemption, therefore, require full compliance 
with all of the conditions in PTE 84-14. Viewed through the lens of PTE 
84-14, this exemption does not make CS Affiliated QPAMs responsible for 
the compliance of the rest of Credit Suisse. Rather, entities that are 
covered by the scope of Section I(g) must be vigilant regarding their 
behavior, because it may signal larger issues regarding integrity of 
all parts of the organization, including its QPAM affiliates or 
subsidiaries. The conduct of entities in a position of control or 
influence over a QPAM are explicitly within the scope of Section I(g). 
For instance, if a QPAM itself were engaged in misconduct or 
irregularities that a parent entity became aware of, the Department has 
concerns about the parent's willingness to take appropriate corrective 
action, particularly in situations where such an entity has failed to 
do so with respect to other non-QPAM entities. The Department's 
concern, which prompted the Department to included Section III(o) in 
the exemption, is consistent with the principle of integrity 
underpinning Section I(g) and the foundational principles of PTE 84-14.
    Although the Department revised this condition slightly as noted 
above, misconduct on behalf of CSAG or other Credit Suisse entities or 
failure to comply in all material respects with the requirements 
imposed by a U.S regulatory authority in connection with the 
Convictions also would be considered relevant to the Department in 
connection with any future exemption requests for extended relief from 
the Applicant related to Section I(g) ineligibility under exemption.

Department's Revisions

I. Section II

    In Section II, the Department added a reference to ``CS Related 
QPAMs'' which was inadvertently omitted from the exemption text. Relief 
for the CS Related QPAMs was indicated in the preamble of the 
Proposal.\16\
---------------------------------------------------------------------------

    \16\ See 87 FR 1186 at 1187, 1189, 1192, and 1193.
---------------------------------------------------------------------------

II. Section III(j)(2)

    The Department determined that a minor change is necessary to 
Section III(j)(2) in order to ensure that Covered Plans are fully and 
adequately protected under the exemption. Proposed Section I(j)(2) 
provides that the CS Affiliated QPAM must agree and warrant to Covered 
Plans:

    (2) To indemnify and hold harmless the Covered Plan for any 
actual losses resulting directly from a CS Affiliated QPAM's 
violation of ERISA's fiduciary duties, as applicable, and of the 
prohibited transaction provisions of ERISA and the Code, as 
applicable; a breach of contract by a CS Affiliated QPAM; or any 
claim arising out of the failure of such CS Affiliated QPAM to 
qualify for the exemptive relief provided by PTE 84-14 as a result 
of a violation of Section I(g) of PTE 84-14 other than the 
Convictions. This condition applies only to actual losses caused by 
the CS Affiliated QPAM's violations[.]

    The Department replaced the reference to ``other than the 
Convictions'' with ``other than the CSAG Conviction.'' Since the CS 
Affiliated QPAMs are in violation of Section I(g) due to each of the 
Convictions, this modification is necessary to assist plans and IRAs 
that wish to withdraw from their arrangement with a CS Affiliated QPAM 
or recover losses as a result of the second conviction (i.e., the CSSEL 
Conviction). The Department did not intend to carve out this important 
protection, which was intentionally

[[Page 23256]]

included in PTE 2019-07 to protect Plans from costs associated with 
additional misconduct. The Department also emphasizes that it views 
actual losses as including losses and related costs arising from 
unwinding transactions with third parties and from transitioning Plan 
client assets to an alternative asset manager. The Department also 
views actual losses as including any exposure on behalf of a QPAM's 
Plan clients to excise taxes under Code section 4975 as a result of a 
CS Affiliated QPAM's inability to rely upon the relief in PTE 84-14.

II. Section III(k)

    Section III(k) of the Proposal provides, in relevant part:

    Within 60 days after the effective date of this one-year 
exemption, each CS Affiliated QPAM provides notice of the exemption 
as published in the Federal Register, along with a separate summary 
describing the facts that led to the Convictions (the Summary), 
which has been submitted to the Department, . . . to each sponsor 
and beneficial owner of a Covered Plan that has entered into a 
written asset or investment management agreement with a CS 
Affiliated QPAM, or the sponsor of an investment fund in any case 
where a CS Affiliated QPAM acts as a sub-adviser to the investment 
fund in which such ERISA-covered plan and IRA invests.

    The Department has removed the reference to ``separate.'' This 
notice of exemption includes a description of the facts that led to the 
Convictions, so the Department determined that a separate Summary is 
not needed as long as each QPAM prominently references the pages of the 
Federal Register where the Department's summary resides.

III. Section III(s)

    The Department corrected a minor typographical error in Section 
III(s), which referred to Section I instead of Section III.

Comments From the Applicant--Response to the Department's Requests for 
Comment in the Proposal

    In the preamble to the Proposal, the Department sought comments 
from ERISA-covered plans and IRAs, as well as the Applicant, on a 
variety of topics. The Applicant provided responses to three of those 
requests. The first request dealt with the validity and magnitude of 
the costs and harms to Covered Plans as identified by the Applicant. 
The second request dealt with whether any additional relief should be 
limited to an individual exemption that permits the types of 
transactions permitted by PTE 84-14, but that does not otherwise allow 
Credit Suisse asset managers to refer to themselves as QPAMs under PTE 
84-14 with respect to Covered Plans that become clients following the 
CSSEL Conviction Date. The third request sought comments from 
interested persons regarding any other investigations or misconduct 
(including any alleged misconduct) that Credit Suisse is a party to 
which may result in criminal prosecution. The Department received no 
responses from ERISA-covered plans and IRAs. Each heading below 
provides the Applicant's response to these comment requests.

I. Validity and Magnitude of Costs and Harms

    The Applicant responded that as set forth in the application for 
relief, the decision to propose an exemption granting relief will avoid 
significant harm to plan clients, and their participants and 
beneficiaries, that may result from such clients being compelled to 
change managers. According to the Applicant, an adverse decision on the 
exemption is seen as the Department's vote of no confidence in a 
manager, and thus effectively denies plans their preferred manager, 
which in itself is harmful to plans. Unplanned asset manager changes 
would cause Covered Plan clients to incur significant costs that they 
otherwise would not incur, and that are substantially in excess of the 
transaction costs normally associated with transitioning to a different 
manager. Under normal circumstances (i.e., if Credit Suisse did not 
lose its individual QPAM exemption), clients have generally not felt 
compelled to move from Credit Suisse.
    In connection with the original exemption issued to the CS 
Affiliated QPAMs, the Applicant provided the following cost data, which 
it has reviewed to ensure that those data continue to reflect current 
market conditions. As of December 2021, CS Affiliated QPAMs manage 
institutional separate accounts for four plans covered by ERISA. The 
ERISA Covered Plans account for about $350 million assets under 
management. CS Affiliated QPAMs also manage three pooled funds trusteed 
by third parties, which account for an aggregate $810 million in assets 
under management that are subject to ERISA.
    According to the Applicant, those clients chose CS Affiliated QPAMs 
and continue to use CS Affiliated QPAMs based on reviews of the 
Applicant's performance, its legal and compliance structure, and its 
controls, among other factors. Assuming such clients could find 
adequate replacement managers, those replacements might not have the 
comparable depth, experience in all kinds of investment cycles, 
consistency--for example, the three most senior investment 
professionals in the Credit strategy discussed below have worked 
together at Credit Suisse for more than 20 years--or expertise in these 
more unusual strategies. Moreover, the costs to those clients of 
changing managers could be significant, given their chosen strategies 
with Credit Suisse. Within traditional stock and bond investments, 
there are hundreds of managers offering similar strategies. In 
contrast, fewer managers offer the far more specialized strategies 
pursued by the CS Affiliated QPAMs. Smaller still is the number of 
managers offering the experience, scale, and performance history of the 
CS Affiliated QPAMs.
    Additionally, selecting a manager typically involves an array of 
steps. These may include manager searches and circulation of requests 
for proposals, for which consultants may charge between $25,000 and 
$50,000 for these unique strategies; extended operational investment; 
due diligence; meetings with portfolio managers and credit analysts; 
investment committee approvals; establishment of investment guidelines; 
fee negotiations; establishing appropriate data feeds and operational 
support; and other contractual negotiations such as for ISDAs and 
Master Repurchase Agreements. There are legal costs for the plan and 
for the trustee. Altogether, these steps have taken as long as 18 
months for some clients. Thus, it may take a plan sponsor a significant 
amount of time to find and implement a new manager if it were required 
to replace Credit Suisse. Its clients have spent considerable time and 
resources conducting manager searches, and they have selected Credit 
Suisse. There may also be collateral consequences for the rest of the 
plan's portfolio: For example, other strategies within the ERISA plan's 
portfolio may need to be changed to accommodate the loss of these 
strategies.
    The Applicant addressed the specific costs of liquidating four 
applicable Credit Suisse strategies: Credit, Commodities, Managed 
Futures, and Multi-Alternative.
Credit Strategy
    According to the Applicant, there could be substantial costs in 
moving to a new Credit manager, which a fiduciary would typically 
consider in its evaluation of potentially changing managers. While some 
new managers might retain certain or even a majority of the securities 
selected by Credit Suisse, others would liquidate the portfolio so that 
they can be judged on their own investment choices. Credit Suisse 
offers a strategy that is a subset

[[Page 23257]]

within fixed income relating to senior loans, and the number of 
managers in that universe is substantially smaller, and smaller still 
when one looks to the experience and scale of Credit Suisse's business. 
An average bid/ask in this asset class may be up to 50 basis points. 
For some unique loans, the spread could approach 250 basis points. 
Additionally, one cannot overlook the very real possibility that the 
range and credit quality of the investments in a plan's portfolio with 
Credit Suisse cannot be replicated with a new manager. In addition, 
cash settlement times for leveraged loans, the largest portion of the 
Credit business, can typically be three to four weeks.
Commodities Strategy
    Another strategy that Credit Suisse runs is a diversified 
commodities index strategy. Investors seek exposure to this asset class 
as a portfolio diversifier and also use it to potentially hedge against 
unexpected inflation risk. Credit Suisse has been managing this 
strategy on behalf of institutional clients since 1994 and is one of 
the few managers in this space with this amount of experience. Credit 
Suisse believes that it is one of the top five asset managers in this 
specific field, measured by assets under management. Within its top 
five peer group, Credit Suisse offers a highly differentiated 
investment process, with lower volatility versus its investment 
benchmarks, and a conservative approach to managing the underlying 
fixed income collateral. In addition, it offers a highly flexible and 
customizable platform that its clients may benefit from to optimize 
their portfolio investments.
    According to the Applicant, denying the individual exemption could 
subject existing ERISA investors to additional expenses if they were to 
unwind existing assets. Unwinding this strategy would entail all of the 
legal and other general transition costs described above in connection 
with the Credit strategy, plus approximately 6-10 basis points to 
liquidate investments and reinvest in the new manager's portfolio.
Managed Futures Strategy
    The third strategy is the Managed Futures strategy, which 
systematically provides exposure to market trends across asset classes, 
geographies, and time horizons. Uncorrelated to traditional markets, 
Managed Futures aims to generate profits during periods when growth-
risk-exposed assets decline significantly. This profile makes it 
potentially a good portfolio diversifier that can help reduce overall 
portfolio risk and improve performance, especially in stressed market 
scenarios. The strategy, which has a more than five-year track record, 
is used as an industry benchmark and consistently ranks as a top 
performer versus its peers. While Credit Suisse competes with about a 
dozen investment managers in this strategy, each replicates the index 
differently, and, thus, changing managers is effectively changing 
strategies. In addition to the legal and other transition costs, the 
liquidation costs are about 10 basis points, doubled, of course, to 20 
basis points, to deal with reinvestment.
Multi-Alternative Strategy
    The final strategy is the Multi-Alternative strategy, which seeks 
to generate attractive risk-adjusted returns through an allocation 
process that combines discretionary insights with systematic investment 
tools. It invests across a range of asset classes and alternative 
investment styles. The strategy aims to limit correlation to stocks and 
bonds, and to manage volatility and drawdown risk. It also strives to 
maintain a high degree of liquidity and transparency. Cost efficiency 
may increase the strategy's return potential relative to higher-cost 
alternative investment options. While Credit Suisse competes with about 
a dozen investment managers in this strategy, each replicates the index 
differently, and, thus, as with the Managed Futures strategy, changing 
managers is effectively changing strategies. In addition to the legal 
and other transition costs, the liquidation costs are about 15 basis 
points, doubled to 30 basis points to deal with reinvestment.
    Department's Note: The Department's request was intended to solicit 
actual dollar amounts with respect to the strategies noted above as 
well as the impacts on ERISA-covered plans and IRAs, as opposed to 
plans not governed by the prohibited transaction provisions of Title I 
of ERISA and the Code. While this one-year exemption is intended to 
avoid unnecessary costs to Covered Plans as a result of an abrupt loss 
of relief under PTE 84-14, the Department wishes to make clear that 
specific dollar amounts of such costs, including those associated with 
exposure to prohibited transactions, must be provided by the Applicant 
in support of any request for relief beyond the end of this one-year 
exemption.

II. Restricting Credit Suisse Asset Managers From Referring to 
Themselves as QPAMs Under PTE 84-14

    The Applicant responded that prohibiting CS Affiliated QPAMs from 
referring to themselves as QPAMs to prospective Covered Plan clients 
would defeat the purpose of the exemption and is not in the interest of 
or protective of such clients. From the Applicant's perspective, the 
exemption is intended to provide clients access to one of the most 
advantageous trading exemptions while ensuring that they are insulated 
from the influence of the bad actors. If the CS Affiliated QPAMs are no 
longer able to represent that they are QPAMs, Covered Plan clients are 
far less likely to retain the QPAM as their manager, even if they 
otherwise would do so. Sophisticated clients know that counterparties 
will not enter into certain transactions unless the manager can 
represent both that it is a QPAM, and that PTE 84-14 applies.
    According to the Applicant, the language proposed suggests that the 
CS Affiliated QPAMs could not represent that they were QPAMs in their 
communications and representations to counterparties. If that were so, 
the entire purpose of the exemption--to make trading more efficient and 
advantageous for Covered Plans--would be thwarted.
    The Applicant added that, put differently, the ability to make QPAM 
representations is critical to the plan fiduciaries' diligence, as 
reflected in the Requests for Proposals received by the CS Affiliated 
QPAMs and in plan trading. The Applicant feels certain that the 
Department would not want to interfere with or hamper the diligence 
those fiduciaries are required to conduct or undercut the exemption's 
usefulness to plans.
    Representing that a manager is a QPAM means that it meets the 
definition in Part VI of PTE 84-14--that is a section 3(38) manager, 
that it has sufficient net equity, and sufficient assets under 
management. While a conviction under Section I(g) prevents a CS 
Affiliated QPAM from using PTE 84-14, under the definition in Section 
VI, it still is a QPAM. The Applicant indicated that affording the CS 
Affiliated QPAMs use of PTE 84-14 to facilitate the strategies that are 
most beneficial to their plan clients, in coordination with the 
imposition of carefully targeted protective conditions to be assessed 
by an independent auditor, serves the plans' interests while protecting 
their participants and beneficiaries.
    Department's Note: The Applicant appears to misconstrue the larger 
structure of a prohibited transaction exemption and its continued 
availability only if the requisite conditions are satisfied. The 
existence of malfeasance within a corporate family is an important 
consideration for plan

[[Page 23258]]

fiduciaries when deciding upon a discretionary asset manager, 
particularly one calling itself a QPAM and relying upon PTE 84-14. 
Therefore, the ability of a QPAM and its client plans to continue to 
rely upon the exemption is directly linked to Section I(g). Regardless 
of the plan fiduciary's choice to select Credit Suisse as an asset 
manager, the relief under the exemption is tied to the integrity 
condition in Section I(g) as a protection not only to plan fiduciaries 
but to the plan participants whose benefits are ultimately at risk when 
it appears there may be a malfeasance and legal compliance problem 
within an entire corporate family. Section I(g) is an integral part of 
PTE 84-14 that establishes a level of integrity to justify, in the 
Applicant's words, the availability of ``one of the most advantageous 
trading exemptions'' and the corresponding ability to don the QPAM 
badge. Any client plan that chooses to retain the QPAM as an asset 
manager after a loss of relief under PTE 84-14 may do so but would need 
to proceed under alternative exemptions or otherwise in full compliance 
with the prohibited transaction provisions under Title I of ERISA and 
the Code.
    Moreover, the Department strongly disagrees that an asset manager's 
ability to make QPAM representations is critical to the diligence of 
plan fiduciaries. In granting PTE 84-14, the Department did not intend 
that an asset manager's ability to rely on PTE 84-14 would constitute a 
badge of sophistication or expertise. The class exemption does not 
contain any sophistication or expertise standards or requirements, nor 
did the Department include any discussion in prior preambles suggesting 
that was the intent of any of the exemption's conditions.
    Rather, the class exemption was intended as an effective and 
efficient means for an asset manager to engage in a wide range of 
beneficial plan transactions that are otherwise prohibited by Title I 
of ERISA and the Code if the conditions of the exemption are met. Plan 
fiduciaries should not view an asset manager's status as a QPAM and 
ability to rely upon PTE 84-14 as an endorsement by the Department of 
that asset manager, an indication that the asset manager is uniquely 
qualified to manage the plan's assets, that the asset manager will be 
more likely to act prudently, or that the asset manager is more likely 
to act with integrity.
    Transactional counterparties that require QPAM status do so for 
their own reasons, including reasons that are unrelated to the 
interests of and protection of a plan. If a plan fiduciary views an 
asset manager's status as a QPAM as beneficial to the management of the 
plan's assets, the fiduciary should strongly consider the asset 
manager's ability to comply with, and continue to comply with, the 
conditions of PTE 84-14 in selecting and/or retaining the QPAM. This 
includes monitoring the asset manager's ability to comply with Section 
I(g).
    The Department is therefore not persuaded that an exemption which 
permits transactions that are similar to those covered by PTE 84-14 
could not be designed to provide the same efficiencies as PTE 84-14. 
The Department is also not persuaded that such an approach would be 
harmful to plans managed by asset managers that do not qualify as QPAMs 
due to a failure to comply with Section I(g) of the PTE 84-14.

III. Investigations or Misconduct (Including Any Alleged Misconduct)

    According to the Applicant, the third question invites the general 
public to raise every potential disagreement they may have with any 
part of the Credit Suisse worldwide organization, regardless of whether 
the conduct is criminal, whether regulators or courts have already 
dismissed those claims, whether the claims have even been brought to 
the attention of the regulator, whether the commenter is correct that 
the conduct could be criminal, and whether the conduct has anything to 
do with asset management. The Applicant submits that the granting of 
the exemption should not depend upon public allegations of wrongdoing, 
regardless of where in the world it occurred, including outside the 
separate asset management division and not involving the CS Affiliated 
QPAMs.
    The Applicant indicated that it brought one matter to the attention 
of the Department in 2019. CSAG has been responding to an investigation 
by the Swiss Office of the Attorney General (``SOAG'') concerning the 
diligence and controls applied to a historical relationship with 
Bulgarian former clients who are alleged to have laundered funds 
through CSAG accounts. On December 17, 2020, the SOAG brought charges 
against CSAG and other parties under Article 102 of the Swiss Criminal 
Code. Trial in this matter commenced in the Swiss Federal Criminal 
Court on February 7, 2022, and was scheduled to conclude on or about 
March 3, 2022. The Applicant represented that Article 102 liability is 
not classified as a felony or a misdemeanor under Swiss law and is 
outside the scope of section I(g) of PTE 84-14.
    The Applicant indicated that other investigations are described in 
the Applicant's public securities laws disclosures.
    Department's Note: The Department did not indicate in its request 
for comment that reporting investigations or misconduct (including any 
alleged misconduct) in connection with the exemption request would 
cause the Department to deny the exemption. However, investigations or 
misconduct founded upon well-verified facts, in particular, are an 
appropriate consideration for the Department when determining whether 
to grant any exemption. Such information may require, at a minimum, 
additional protective conditions to deal with any actual or potential 
harm to plans and IRAs that cannot be ignored in light of the statutory 
criteria for granting an exemption under ERISA section 408(a) and Code 
section 4975(c)(2).

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under ERISA section 408(a) and/or Code section 4975(c)(2) does not 
relieve a fiduciary or other party in interest or disqualified person 
from certain other provisions of ERISA and/or the Code, including any 
prohibited transaction provisions to which the exemption does not apply 
and the general fiduciary responsibility provisions of ERISA section 
404, which, among other things, require a fiduciary to discharge his 
duties respecting the plan solely in the interest of the participants 
and beneficiaries of the plan and in a prudent fashion in accordance 
with ERISA section 404(a)(1)(B); nor does it affect the requirement of 
Code section 401(a) that the plan must operate for the exclusive 
benefit of the employees of the employer maintaining the plan and their 
beneficiaries;
    (2) Before an exemption may be granted under ERISA section 408(a) 
and/or Code section 4975(c)(2), the Department must find that the 
exemption is administratively feasible, in the interests of the plan 
and of its participants and beneficiaries, and protective of the rights 
of participants and beneficiaries of the plan;
    (3) The exemption is supplemental to, and not in derogation of, any 
other provisions of ERISA and/or the Code, including statutory or 
administrative exemptions and transitional rules. Furthermore, the fact 
that a transaction is subject to an administrative or

[[Page 23259]]

statutory exemption is not dispositive of whether the transaction is in 
fact a prohibited transaction; and
    (4) The exemption is subject to the express condition that the 
material facts and representations contained in each application are 
true and complete, and that each application accurately describes all 
material terms of the transaction which is the subject of the 
exemption.
    Accordingly, the following exemption is granted under the authority 
of ERISA section 408(a) and Code section 4975(c)(2) and in accordance 
with the procedures set forth in 29 CFR part 2570, subpart B (76 FR 
66637, 66644, October 27, 2011):

One-Year Exemption

    The Department is granting this one-year exemption under the 
authority of ERISA section 408(a) and Internal Revenue Code (or Code) 
section 4975(c)(2), and in accordance with the procedures set forth in 
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).\17\ 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978, 5 U.S.C. app. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue exemptions of the type requested to 
the Secretary of Labor. Therefore, this notice of exemption is issued 
solely by the Department.
---------------------------------------------------------------------------

    \17\ For purposes of this one-year exemption, references to 
ERISA section 406, unless otherwise specified, should be read to 
refer as well to the corresponding provisions of Code section 4975.
---------------------------------------------------------------------------

Section I. Definitions

    (a) The term ``Convictions'' means (1) the judgment of conviction 
against CSAG for one count of conspiracy to violate section 7206(2) of 
the Internal Revenue Code in violation of Title 18, United States Code, 
Section 371, that was entered in the District Court for the Eastern 
District of Virginia in Case Number 1:14-cr-188-RBS, on November 21, 
2014 (the ``CSAG Conviction''); and (2) the judgment of conviction 
against CSSEL, when it is entered, in Case Number 1:21-cr-00520-WFK 
(the ``CSSEL Conviction'').
    (b) The term ``Covered Plan'' means a plan subject to Part IV of 
Title I of ERISA (an ``ERISA-covered plan'') or a plan subject to Code 
section 4975 (an ``IRA''), in each case, with respect to which a CS 
Affiliated QPAM relies on PTE 84-14, or with respect to which a CS 
Affiliated QPAM (or any CSAG affiliate) has expressly represented that 
the manager qualifies as a QPAM or relies on PTE 84-14. A Covered Plan 
does not include an ERISA-covered plan or IRA to the extent the CS 
Affiliated QPAM has expressly disclaimed reliance on QPAM status or PTE 
84-14 in entering into a contract, arrangement, or agreement with the 
ERISA-covered plan or IRA. Notwithstanding the above, a CS Affiliated 
QPAM may disclaim reliance on QPAM status or PTE 84-14 in a written 
modification of a contract, arrangement, or agreement with an ERISA-
covered plan or IRA, where: the modification is made in a bilateral 
document signed by the client; the client's attention is specifically 
directed toward the disclaimer; and the client is advised in writing 
that, with respect to any transaction involving the client's assets, 
the CS Affiliated QPAM will not represent that it is a QPAM, and will 
not rely on the relief described in PTE 84-14.
    (c) The term ``CSAG'' means Credit Suisse AG.
    (d) The term ``CSSEL'' means Credit Suisse Securities (Europe) 
Limited.
    (e) The term ``CS Affiliated QPAM'' means Credit Suisse Asset 
Management, LLC (``CSAM LLC'') and Credit Suisse Asset Management 
Limited (``CSAM Ltd.'') and any current or future ``affiliate'' of CSAG 
or CSSEL (as defined in Part VI(d) of PTE 84-14) that qualifies as a 
``qualified professional asset manager'' (as defined in Section VI(a) 
of PTE 84-14) \18\ and that relies on the relief provided by PTE 84-14 
and with respect to which CSAG or CSSEL is a current or future 
``affiliate'' (as defined in Section VI(d) of PTE 84-14), but is not a 
CS Related QPAM. The term ``CS Affiliated QPAM'' excludes CSAG and 
CSSEL.
---------------------------------------------------------------------------

    \18\ In general terms, a QPAM is an independent fiduciary that 
is a bank, savings and loan association, insurance company, or 
investment adviser that meets certain equity or net worth 
requirements and other licensure requirements and that has 
acknowledged in a written management agreement that it is a 
fiduciary with respect to each plan that has retained the QPAM.
---------------------------------------------------------------------------

    (f) The term ``CS Related QPAM'' means any current or future 
``qualified professional asset manager'' (as defined in Section VI(a) 
of PTE 84-14) that relies on the relief provided by PTE 84-14, and with 
respect to which CSAG or CSSEL owns a direct or indirect five (5) 
percent or more interest, but with respect to which CSAG or CSSEL is 
not an ``affiliate'' (as defined in section VI(d)(1) of PTE 84-14) The 
term ``CS Related QPAM'' excludes CSAG and CSSEL.
    (g) The term ``Exemption Period'' means the one-year period that 
begins on the date of the CSSEL Conviction.
    (h) The term ``CSAG Plea Agreement'' means the plea agreement 
entered into between the United States of America, by and through the 
United States Department of Justice, and the United States Attorney's 
Office for the Eastern District of Virginia, and CSSEL in Case Number 
1:14-cr-188-RBS.
    (i) The term ``CSSEL Plea Agreement'' means the plea agreement 
entered into between the United States of America, by and through the 
United States Department of Justice, Criminal Division, Money 
Laundering and Asset Recovery Section and Fraud Section, and the United 
States Attorney's Office for the Eastern District of New York, and 
CSSEL in Case Number 1:21-cr-00520-WFK.

Section II. Covered Transactions

    The CS Affiliated QPAMs, as defined in Section I(e), and the CS 
Related QPAMs, as defined in Section I(f), will not be precluded from 
relying on the exemptive relief provided by Prohibited Transaction 
Class Exemption 84-14 (PTE 84-14) \19\ during the Exemption Period, 
notwithstanding the ``Convictions'' against CSAG and CSSEL (as defined 
in Section I(a)), provided that the conditions in Section III are 
satisfied.
---------------------------------------------------------------------------

    \19\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430, 
(Oct. 10, 1985), as amended at 70 FR 49305 (Aug. 23, 2005), and as 
amended at 75 FR 38837 (July 6, 2010).
---------------------------------------------------------------------------

Section III. Conditions

    (a) The CS Affiliated QPAMs and the CS Related QPAMs (including 
their officers, directors, agents other than CSG, CSAG, and CSSEL, 
employees of such QPAMs, and CSAG employees that do work for CS 
Affiliated or Related QPAMs described in subparagraph (d) below) did 
not know or did not have reason to know of and did not participate in 
the criminal conduct of CSAG and CSSEL that is the subject of the 
Convictions. Further, any other party engaged on behalf of the CS 
Affiliated QPAMs and CS Related QPAMs who had responsibility for, or 
exercised authority in connection with the management of plan assets 
did not know or have reason to know of and did not participate in the 
criminal conduct that is the subject of the Convictions. For purposes 
of this exemption, including paragraph (c) below, ``participate in'' 
refers not only to active participation in the criminal conduct of CSAG 
and CSSEL that is the subject of the Convictions, but also to knowing 
approval of the criminal conduct, or knowledge of such conduct without 
taking active steps to prohibit such conduct, including reporting the 
conduct to the individual's supervisors, and to the Board of Directors.
    (b) The CS Affiliated QPAMs and the CS Related QPAMs (including 
their

[[Page 23260]]

officers, directors, agents other than CSAG, employees of such QPAMs, 
and CSAG employees described in subparagraph (d)(3) below) did not 
receive direct compensation, or knowingly receive indirect 
compensation, in connection with the criminal conduct of that is the 
subject of the Convictions. Further, any other party engaged on behalf 
of the CS Affiliated QPAMs and the CS Related QPAMs who had 
responsibility for, or exercised authority in connection with the 
management of plan assets did not receive direct compensation, or 
knowingly receive indirect compensation, in connection with the 
criminal conduct of that is the subject of the subject of the 
Convictions;
    (c) The CS Affiliated QPAMs do not currently and will not in the 
future employ or knowingly engage any of the individuals who 
participated in the criminal conduct of CSAG and CSSEL that is the 
subject of the Convictions;
    (d) At all times during the Exemption Period, no CS Affiliated QPAM 
will use its authority or influence to direct an ``investment fund'' 
(as defined in Section VI(b) of PTE 84-14) that is subject to ERISA or 
the Code and managed by such CS Affiliated QPAM with respect to one or 
more Covered Plans, to enter into any transaction with CSAG or CSSEL or 
to engage CSAG or CSSEL to provide any service to such investment fund, 
for a direct or indirect fee borne by such investment fund, regardless 
of whether such transaction or service may otherwise be within the 
scope of relief provided by an administrative or statutory exemption. A 
CS Affiliated QPAM will not fail this condition solely because:
    (1) A CSAG affiliate serves as a local sub-custodian that is 
selected by an unaffiliated global custodian that, in turn, is selected 
by someone other than a CS Affiliated QPAM or CS Related QPAM;
    (2) CSAG provides only necessary, non-investment, non-fiduciary 
services that support the operations of CS Affiliated QPAMs, at the CS 
Affiliated QPAM's own expense, and the Covered Plan is not required to 
pay any additional fee beyond its agreed-to asset management fee. This 
exception does not permit CSAG or its branches to provide any service 
to an investment fund managed by a CS Affiliated QPAM or CS Related 
QPAM; or
    (3) CSAG employees are double-hatted, seconded, supervised, or 
subject to the control of a CS Affiliated QPAM;
    (e) Any failure of a CS Affiliated QPAM to satisfy Section I(g) of 
PTE 84-14 arose solely from the Convictions;
    (f) A CS Affiliated QPAM or a CS Related QPAM did not exercise 
authority over the assets of any plan subject to Part 4 of Title I of 
ERISA (an ``ERISA-covered plan'') or Code section 4975 (an ``IRA'') in 
a manner that it knew or should have known would further the criminal 
conduct that is the subject of the Convictions; or cause the CS 
Affiliated QPAM or CS Related QPAM or its affiliates to directly or 
indirectly profit from the criminal conduct that is the subject of the 
Convictions;
    (g) Neither CSAG nor CSSEL will act as a fiduciary within the 
meaning of ERISA section 3(21)(A)(i) or (iii), or Code section 
4975(e)(3)(A) and (C), with respect to ERISA-covered Plan and IRA 
assets, except that each may act as such a fiduciary (1) with respect 
to employee benefit plans sponsored for its own employees or employees 
of an affiliate; or (2) in connection with securities lending services 
of the New York Branch of CSAG. Neither CSAG nor CSSEL will be treated 
as violating the conditions of the exemption solely because it acted as 
an investment advice fiduciary within the meaning of ERISA section 
3(21)(A)(ii) or Code section 4975(e)(3)(B);
    (h)(1) Each CS Affiliated QPAM must maintain, adjust (to the extent 
necessary), implement, and follow the written policies and procedures 
described below (the Policies). Notwithstanding the preceding sentence, 
a CS Affiliated QPAM may not engage in any transaction or arrangement 
described in Section III(d)(1) through (3) of this exemption before the 
date the Policies below have been developed, implemented, and followed. 
The Policies must require and must be reasonably designed to ensure 
that:
    (i) The asset management decisions of the CS Affiliated QPAM are 
conducted independently of CSAG's and CSSEL's corporate management and 
business activities, and without considering any fee a CS-related local 
sub-custodian may receive from those decisions. This condition does not 
preclude a CS Affiliated QPAM from receiving publicly available 
research and other widely available information from a CSAG affiliate 
other than CSSEL;
    (ii) The CS Affiliated QPAM fully complies with ERISA's fiduciary 
duties, and with ERISA and the Code's prohibited transaction 
provisions, in each case as applicable with respect to each Covered 
Plan, and does not knowingly participate in any violation of these 
duties and provisions with respect to Covered Plans;
    (iii) The CS Affiliated QPAM does not knowingly participate in any 
other person's violation of ERISA or the Code with respect to Covered 
Plans;
    (iv) Any filings or statements made by the CS Affiliated QPAM to 
regulators, including but not limited to, the Department, the 
Department of the Treasury, the Department of Justice, and the Pension 
Benefit Guaranty Corporation, on behalf of or in relation to Covered 
Plans, are materially accurate and complete, to the best of such QPAM's 
knowledge at that time;
    (v) To the best of its knowledge at that time, the CS Affiliated 
QPAM does not make material misrepresentations or omit material 
information in its communications with such regulators with respect to 
Covered Plans, or make material misrepresentations or omit material 
information in its communications with Covered Plans; and
    (vi) The CS Affiliated QPAM complies with the terms of this one-
year exemption, and CSAG complies with the terms of Section III(d)(2);
    (2) Any violation of, or failure to comply with an item in 
subparagraphs (h)(1)(ii) through (vi), is corrected as soon as 
reasonably possible upon discovery, or as soon after the QPAM 
reasonably should have known of the noncompliance (whichever is 
earlier), and any such violation or compliance failure not so corrected 
is reported, upon the discovery of such failure to so correct, in 
writing. This report must be made to the head of compliance and the 
general counsel (or their functional equivalent) of the relevant CS 
Affiliated QPAM that engaged in the violation or failure, and the 
independent auditor responsible for reviewing compliance with the 
Policies. A CS Affiliated QPAM will not be treated as having failed to 
develop, implement, maintain, or follow the Policies, provided that it 
corrects any instance of noncompliance as soon as reasonably possible 
upon discovery, or as soon as reasonably possible after the CS 
Affiliated QPAM reasonably should have known of the noncompliance 
(whichever is earlier), and provided that it adheres to the reporting 
requirements set forth in this subparagraph (2);
    (3) Each CS Affiliated QPAM must maintain, adjust (to the extent 
necessary), and implement or continue a program of training during the 
Exemption Period (the Training), to be conducted at least annually, for 
all relevant CS Affiliated QPAM asset/portfolio management, trading, 
legal, compliance, and internal audit personnel. The Training must:

[[Page 23261]]

    (i) At a minimum, cover the Policies, ERISA and Code compliance 
(including applicable fiduciary duties and the prohibited transaction 
provisions), ethical conduct, the consequences for not complying with 
the conditions of this exemption (including any loss of exemptive 
relief provided herein), and the requirement for prompt reporting of 
wrongdoing; and
    (ii) Be conducted by a professional who has been prudently selected 
and who has appropriate technical training and proficiency with ERISA 
and the Code to perform the tasks required by this exemption; and
    (iii) Be conducted in-person, electronically, or via a website;
    (i)(1) Each CS Affiliated QPAM submits to an audit by an 
independent auditor, who has been prudently selected and who has 
appropriate technical training and proficiency with ERISA and the Code, 
to evaluate the adequacy of, and each CS Affiliated QPAM's compliance 
with, the Policies and Training described herein. The audit requirement 
must be incorporated in the Policies. The audit must cover the 12-month 
period that begins on November 21, 2021. The audit must be completed no 
later than 180 days after the period to which it applies (May 19, 
2023);
    (2) Within the scope of the audit and to the extent necessary for 
the auditor, in its sole opinion, to complete its audit and comply with 
the conditions for relief described herein, and only to the extent such 
disclosure is not prevented by state or federal statute, or involves 
communications subject to attorney client privilege, each CS Affiliated 
QPAM and, if applicable, CSAG, will grant the auditor unconditional 
access to its business, including, but not limited to: Its computer 
systems; business records; transactional data; workplace locations; 
training materials; and personnel. Such access is limited to 
information relevant to the auditor's objectives as specified by the 
terms of this exemption;
    (3) The auditor's engagement must specifically require the auditor 
to determine whether each CS Affiliated QPAM has developed, 
implemented, maintained, and followed the Policies in accordance with 
the conditions of this one-year exemption, and has developed and 
implemented the Training, as required herein;
    (4) The auditor's engagement must specifically require the auditor 
to test each CS Affiliated QPAM's operational compliance with the 
Policies and Training. In this regard, the auditor must test, for each 
CS Affiliated QPAM, a sample of such: (1) CS Affiliated QPAM's 
transactions involving Covered Plans; (2) each CS Affiliated QPAM's 
transactions involving CSAG affiliates that serve as a local sub-
custodian. The samples must be sufficient in size and nature to afford 
the auditor a reasonable basis to determine such CS Affiliated QPAM's 
operational compliance with the Policies and Training;
    (5) For each audit, on or before the end of the relevant period 
described in Section III(i)(1) for completing the audit, the auditor 
must issue a written report (the Audit Report) to CSAG and the CS 
Affiliated QPAM to which the audit applies that describes the 
procedures performed by the auditor in connection with its examination. 
The auditor, at its discretion, may issue a single consolidated Audit 
Report that covers all the CS Affiliated QPAMs. The Audit Report must 
include the auditor's specific determinations regarding:
    (i) The adequacy of each CS Affiliated QPAM's Policies and 
Training; each CS Affiliated QPAM's compliance with the Policies and 
Training; the need, if any, to strengthen such Policies and Training; 
and any instance of the respective CS Affiliated QPAM's noncompliance 
with the written Policies and Training described in Section III(h) 
above. The CS Affiliated QPAM must promptly address any noncompliance. 
The CS Affiliated QPAM must promptly address or prepare a written plan 
of action to address any determination as to the adequacy of the 
Policies and Training and the auditor's recommendations (if any) with 
respect to strengthening the Policies and Training of the respective CS 
Affiliated QPAM. Any action taken or the plan of action to be taken by 
the respective CS Affiliated QPAM must be included in an addendum to 
the Audit Report (such addendum must be completed prior to the 
certification described in Section III(i)(7) below). In the event such 
a plan of action to address the auditor's recommendation regarding the 
adequacy of the Policies and Training is not completed by the time of 
submission of the Audit Report, the following period's Audit Report 
must state whether the plan was satisfactorily completed. Any 
determination by the auditor that a CS Affiliated QPAM has implemented, 
maintained, and followed sufficient Policies and Training must not be 
based solely or in substantial part on an absence of evidence 
indicating noncompliance. In this last regard, any finding that a CS 
Affiliated QPAM has complied with the requirements under this 
subparagraph must be based on evidence that the particular CS 
Affiliated QPAM has actually implemented, maintained, and followed the 
Policies and Training required by this exemption. Furthermore, the 
auditor must not solely rely on the Annual Exemption Report created by 
the Compliance Officer, as described in Section III(m) below, as the 
basis for the auditor's conclusions in lieu of independent 
determinations and testing performed by the auditor as required by 
Section III(i)(3) and (4) above; and
    (ii) The adequacy of the Exemption Review described in Section 
III(m);
    (6) The auditor must notify the respective CS Affiliated QPAM of 
any instance of noncompliance identified by the auditor within five (5) 
business days after such noncompliance is identified by the auditor, 
regardless of whether the audit has been completed as of that date;
    (7) With respect to the Audit Report, the general counsel, or one 
of the three most senior executive officers of the CS Affiliated QPAM 
to which the Audit Report applies, must certify in writing, under 
penalty of perjury, that the officer has reviewed the Audit Report and 
this exemption; that, to the best of such officer's knowledge at the 
time, the CS Affiliated QPAM has addressed, corrected, and remedied any 
noncompliance and inadequacy or has an appropriate written plan to 
address any inadequacy regarding the Policies and Training identified 
in the Audit Report. This certification must also include the 
signatory's determination that, to the best of the officer's knowledge 
at the time, the Policies and Training in effect at the time of signing 
are adequate to ensure compliance with the conditions of this 
exemption, and with the applicable provisions of ERISA and the Code. 
Notwithstanding the above, no person, including any person referenced 
in the CSAG or CSSEL Statement of Facts that gave rise to the CSAG or 
CSSEL Plea Agreement, who knew of, or should have known of, or 
participated in, any misconduct described in the CSAG or CSSEL 
Statement of Facts, by any party, may provide the certification 
required by this exemption, unless the person took active documented 
steps to stop the misconduct;
    (8) A copy of the Audit Report must be provided to CSAG's Board of 
Directors and either the Risk Committee or the Audit Committee of 
CSAG's Board of Directors; and a senior executive officer or 
chairperson of either the Risk Committee or the Audit Committee must 
review the Audit Report for each CS Affiliated QPAM and must certify in 
writing, under penalty of perjury, that such person has reviewed each 
Audit Report;

[[Page 23262]]

    (9) Each CS Affiliated QPAM provides its certified Audit Report, by 
regular mail to: Office of Exemption Determinations (OED), 200 
Constitution Avenue NW, Suite 400, Washington, DC 20210, or by private 
carrier to: 122 C Street NW, Suite 400, Washington, DC 20001-2109. The 
delivery must take place no later than 45 days following completion of 
the Audit Report. The Audit Report will be made part of the public 
record regarding this one-year exemption. Furthermore, each CS 
Affiliated QPAM must make its Audit Reports unconditionally available, 
electronically or otherwise, for examination upon request by any duly 
authorized employee or representative of the Department, other relevant 
regulators, and any fiduciary of a Covered Plan;
    (10) Any engagement agreement with an auditor to perform the audit 
required by this exemption must be submitted to OED no later than two 
(2) months after the execution of such agreement;
    (11) The auditor must provide the Department, upon request, for 
inspection and review, access to all the workpapers created and used in 
connection with the audit, provided such access, inspection, and review 
is otherwise permitted by law; and
    (12) CSAG and/or the CS Affiliated QPAM must notify the Department 
of a change in the independent auditor no later than two (2) months 
after the engagement of a substitute or subsequent auditor and must 
provide an explanation for the substitution or change including a 
description of any material disputes involving the terminated auditor 
and CSAG and/or the CS Affiliated QPAMs;
    (j) As of the effective date of this one-year exemption, with 
respect to any arrangement, agreement, or contract between a CS 
Affiliated QPAM and a Covered Plan, the CS Affiliated QPAM agrees and 
warrants to Covered Plans:
    (1) To comply with ERISA and the Code, as applicable with respect 
to such Covered Plan; to refrain from engaging in prohibited 
transactions that are not otherwise exempt (and to promptly correct any 
prohibited transactions); and to comply with the standards of prudence 
and loyalty set forth in ERISA section 404 with respect to each such 
ERISA-covered plan and IRA to the extent that ERISA section 404 is 
applicable;
    (2) To indemnify and hold harmless the Covered Plan for any actual 
losses resulting directly from a CS Affiliated QPAM's violation of 
ERISA's fiduciary duties, as applicable, and of the prohibited 
transaction provisions of ERISA and the Code, as applicable; a breach 
of contract by a CS Affiliated QPAM; or any claim arising out of the 
failure of such CS Affiliated QPAM to qualify for the exemptive relief 
provided by PTE 84-14 as a result of a violation of Section I(g) of PTE 
84-14 other than the CSAG Conviction. This condition applies only to 
actual losses caused by the CS Affiliated QPAM's violations;
    (3) Not to require (or otherwise cause) the Covered Plan to waive, 
limit, or qualify the liability of the CS Affiliated QPAM for violating 
ERISA or the Code for engaging in prohibited transactions;
    (4) Not to restrict the ability of the Covered Plan to terminate or 
withdraw from its arrangement with the CS Affiliated QPAM, with respect 
to any investment in a separately-managed account or pooled fund 
subject to ERISA and managed by such CS Affiliated QPAM, with the 
exception of reasonable restrictions, appropriately disclosed in 
advance, that are specifically designed to ensure equitable treatment 
of all investors in a pooled fund in the event such withdrawal or 
termination may have adverse consequences for all other investors. In 
connection with any such arrangement involving investments in pooled 
funds subject to ERISA entered into after the effective date of this 
exemption, the adverse consequences must relate to a lack of liquidity 
of the underlying assets, valuation issues, or regulatory reasons that 
prevent the fund from promptly redeeming an ERISA-covered plan's or 
IRA's investment, and such restrictions must be applicable to all such 
investors and be effective no longer than reasonably necessary to avoid 
the adverse consequences;
    (5) Not to impose any fees, penalties, or charges for such 
termination or withdrawal with the exception of reasonable fees, 
appropriately disclosed in advance, that are specifically designed to 
prevent generally-recognized abusive investment practices or 
specifically designed to ensure equitable treatment of all investors in 
a pooled fund in the event such withdrawal or termination may have 
adverse consequences for all other investors, provided that such fees 
are applied consistently and in a like manner to all such investors;
    (6) Not to include exculpatory provisions disclaiming or otherwise 
limiting liability of the CS Affiliated QPAMs for a violation of such 
agreement's terms. To the extent consistent with ERISA section 410, 
however, this provision does not prohibit disclaimers for liability 
caused by an error, misrepresentation, or misconduct of a plan 
fiduciary or other party hired by the plan fiduciary who is independent 
of CSAG and its affiliates, or damages arising from acts outside the 
control of the CS Affiliated QPAM; and
    (7) Within 120 days after the effective date of this one-year 
exemption, each CS Affiliated QPAM must provide a notice of its 
obligations under this Section III(j) to each Covered Plan. For 
prospective Covered Plans that enter into a written asset or investment 
management agreement with a CS Affiliated QPAM on or after a date that 
is 120 days after the effective date of this exemption, the CS 
Affiliated QPAM must agree to its obligations under this Section III(j) 
in an updated investment management agreement between the CS Affiliated 
QPAM and such clients or other written contractual agreement. 
Notwithstanding the above, a CS Affiliated QPAM will not violate the 
condition solely because a Covered Plan refuses to sign an updated 
investment management agreement. For new Covered Plans that were 
provided an investment management agreement prior to the effective date 
of this exemption, returning it within 120 days after the effective 
date of this exemption, and that signed investment management agreement 
requires amendment to meet the terms of the exemption, the CS 
Affiliated QPAM may provide the new Covered Plan with amendments that 
need not be signed with any documents required by this subsection (j) 
within ten (10) business days after receipt of the signed agreement. 
This condition will be deemed met for each Covered Plan that received a 
notice pursuant to PTE 2019-07 that meets the terms of this condition.
    (k) Within 60 days after the effective date of this one-year 
exemption, each CS Affiliated QPAM provides notice of the exemption as 
published in the Federal Register, along with a summary describing the 
facts that led to the Convictions (the Summary), which has been 
submitted to the Department, and a prominently displayed statement (the 
Statement) that the Convictions result in a failure to meet a condition 
in PTE 84-14 and the CSSEL Conviction results in a failure to meet a 
condition in PTE 2019-07, to each sponsor and beneficial owner of a 
Covered Plan that has entered into a written asset or investment 
management agreement with a CS Affiliated QPAM, or the sponsor of an 
investment fund in any case where a CS Affiliated QPAM acts as a sub-
adviser to the investment fund in which such ERISA-covered plan and IRA 
invests. All prospective Covered Plan clients that enter into a written 
asset or investment management agreement with a CS Affiliated QPAM 
after a date that is 60 days after the effective date of this

[[Page 23263]]

exemption must receive a copy of the notice of the exemption, the 
Summary, and the Statement before, or contemporaneously with, the 
Covered Plan's receipt of a written asset or investment management 
agreement from the CS Affiliated QPAM. The notices may be delivered 
electronically (including by an email that has a link to the one-year 
exemption).
    (l) The CS Affiliated QPAM must comply with each condition of PTE 
84-14, as amended, with the sole exception of the violation of Section 
I(g) of PTE 84-14 that is attributable to the Convictions. If, during 
the Exemption Period, an entity within the Credit Suisse corporate 
structure is convicted of a crime described in Section I(g) of PTE 84-
14 (other than the Convictions), relief in this exemption would 
terminate immediately;
    (m)(1) Within 60 days after the effective date of this exemption, 
each CS Affiliated QPAM must designate a senior compliance officer (the 
Compliance Officer) who will be responsible for compliance with the 
Policies and Training requirements described herein. For purposes of 
this condition (m), each relevant line of business within a CS 
Affiliated QPAM may designate its own Compliance Officer(s). 
Notwithstanding the above, no person, including any person referenced 
in the CSAG or CSSEL Statement of Facts that gave rise to the CSAG or 
CSSEL Plea Agreement, who knew of, or should have known of, or 
participated in, any misconduct described in the CSAG or CSSEL 
Statement of Facts, by any party, may be involved with the designation 
or responsibilities required by this condition, unless the person took 
active documented steps to stop the misconduct. The Compliance Officer 
must conduct a review of each twelve-month period of the Exemption 
Period (the Exemption Review), to determine the adequacy and 
effectiveness of the implementation of the Policies and Training. With 
respect to the Compliance Officer, the following conditions must be 
met:
    (i) The Compliance Officer must be a professional who has extensive 
experience with, and knowledge of, the regulation of financial services 
and products, including under ERISA and the Code; and
    (ii) The Compliance Officer must have a direct reporting line to 
the highest-ranking corporate officer in charge of compliance for the 
applicable CS Affiliated QPAM.
    (2) With respect to the Exemption Review, the following conditions 
must be met:
    (i) The Annual Exemption Review includes a review of the CS 
Affiliated QPAM's compliance with and effectiveness of the Policies and 
Training and of the following: Any compliance matter related to the 
Policies or Training that was identified by, or reported to, the 
Compliance Officer or others within the compliance and risk control 
function (or its equivalent) during the previous year; the most recent 
Audit Report issued pursuant to this exemption or PTE 2019-07; any 
material change in the relevant business activities of the CS 
Affiliated QPAMs; and any change to ERISA, the Code, or regulations 
related to fiduciary duties and the prohibited transaction provisions 
that may be applicable to the activities of the CS Affiliated QPAMs;
    (ii) The Compliance Officer prepares a written report for the 
Exemption Review (an Exemption Report) that (A) summarizes his or her 
material activities during the prior year; (B) sets forth any instance 
of noncompliance discovered during the prior year, and any related 
corrective action; (C) details any change to the Policies or Training 
to guard against any similar instance of noncompliance occurring again; 
and (D) makes recommendations, as necessary, for additional training, 
procedures, monitoring, or additional and/or changed processes or 
systems, and management's actions on such recommendations;
    (iii) In the Exemption Report, the Compliance Officer must certify 
in writing that to the best of his or her knowledge at the time: (A) 
The report is accurate; (B) the Policies and Training are working in a 
manner which is reasonably designed to ensure that the Policies and 
Training requirements described herein are met; (C) any known instance 
of noncompliance during the prior year and any related correction taken 
to date have been identified in the Exemption Report; and (D) the CS 
Affiliated QPAMs have complied with the Policies and Training, and/or 
corrected (or are correcting) any known instances of noncompliance in 
accordance with Section III(h) above;
    (iv) The Exemption Report must be provided to appropriate corporate 
officers of CSAG and to each CS Affiliated QPAM to which such report 
relates, and to the head of compliance and the general counsel (or 
their functional equivalent) of CSAG and the relevant CS Affiliated 
QPAM; and the report must be made unconditionally available to the 
independent auditor described in Section III(i) above;
    (v) The Exemption Review, including the Compliance Officer's 
written Annual Exemption Report, must cover the twelve-month period 
beginning on November 21, 2021. The Annual Review, including the 
Compliance Officer's written Report, must be completed within three (3) 
months following the end of the period to which it relates;
    (n) CSAG imposes its internal procedures, controls, and protocols 
on CSAG and CSSEL to reduce the likelihood of any recurrence of conduct 
that is the subject of the Convictions;
    (o) Relief in this exemption will terminate on the date that is six 
months following the date that a U.S. regulatory authority makes a 
final decision that CSAG failed to comply in all material respects with 
any requirement imposed by such regulatory authority in connection with 
the Convictions;
    (p) Each CS Affiliated QPAM will maintain records necessary to 
demonstrate that the conditions of this exemption have been met for six 
(6) years following the date of any transaction for which the CS 
Affiliated QPAM relies upon the relief in this exemption;
    (q) During the Exemption Period, CSAG must: (1) Immediately 
disclose to the Department any Deferred Prosecution Agreement (a DPA) 
or Non-Prosecution Agreement (an NPA) with the U.S. Department of 
Justice, entered into by Credit Suisse Group AG or CSAG or any of its 
affiliates (as defined in Section VI(d) of PTE 84-14) in connection 
with conduct described in Section I(g) of PTE 84-14 or section 411 of 
ERISA; and (2) immediately provide the Department with any information 
requested by the Department, as permitted by law, regarding the 
agreement and/or conduct and allegations that led to the agreement;
    (r) Within 60 days after the effective date of this exemption, each 
CS Affiliated QPAM, in its agreements with, or in other written 
disclosures provided to Covered Plans, will clearly and prominently 
inform Covered Plan clients of their right to obtain a copy of the 
Policies or a description (Summary Policies) which accurately 
summarizes key components of the CS Affiliated QPAM's written Policies 
developed in connection with this exemption. If the Policies are 
thereafter changed, each Covered Plan client must receive a new 
disclosure within six (6) months following the end of the calendar year 
during which the Policies were changed.\20\ With respect to this

[[Page 23264]]

requirement, the description may be continuously maintained on a 
website, provided that such website link to the Policies or Summary 
Policies is clearly and prominently disclosed to each Covered Plan;
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    \20\ If the Applicant meets this disclosure requirement through 
Summary Policies, changes to the Policies shall not result in the 
requirement for a new disclosure unless, as a result of changes to 
the Policies, the Summary Policies are no longer accurate.
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    (s) A CS Affiliated QPAM will not fail to meet the terms of this 
one-year exemption solely because a different CS Affiliated QPAM fails 
to satisfy a condition for relief described in Section III(c), (d), 
(h), (i), (j), (k), (l), (p) or (r); or if the independent auditor 
described in Section III(i) fails to comply with a provision of the 
exemption other than the requirement described in Section III(i)(11), 
provided that such failure did not result from any actions or inactions 
of CSAG or its affiliates; and
    (t) All the material facts and representations set forth in the 
Summary of Facts and Representations are true and accurate.
    Effective Date: This exemption will be in effect for one (1) year, 
beginning on the date of the CSSEL Conviction.

    Signed at Washington, DC.
Timothy P. Hauser,
Deputy Assistant Secretary for Program Operations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2022-08306 Filed 4-18-22; 8:45 am]
BILLING CODE 4510-29-P