Notice of Proposed Exemption Involving Credit Suisse AG Located in Zurich, Switzerland, 68712-68716 [2014-27173]

Download as PDF tkelley on DSK3SPTVN1PROD with NOTICES 68712 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices Labor, Room N–1515, 200 Constitution Avenue NW., Washington, DC 20210. After considering the comments, the Department has decided to hold a hearing regarding whether the Credit Suisse Affiliated Entities and the Credit Suisse Related Entities may prospectively rely on PTE 84–14 on a permanent, conditional basis. The hearing will be held on January 15, 2015, beginning at 10:00 a.m., EST, in Room C5320 at the Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. Any interested person who wishes to be assured of an opportunity to present oral comments at the hearing should submit by December 29, 2014: (1) A written request to be heard; and (2) Five copies of an outline of the topics to be discussed. The topics to be discussed should address the effect that the proposed exemption, if granted, will have on employee benefit plans; including whether the proposed exemption is in the interest of plans and of their participants and beneficiaries, and whether the safeguards in the proposed exemption are adequate to protect the rights of participants and beneficiaries of such plans. Presenters at the hearing should be aware that the Department is particularly interested in factual evidence that will enable the Department to determine whether the proposed exemption is in the interest of, and protective of, employee benefit plans and IRAs. The request to be heard and accompanying outline should be sent to: Office of Exemption Determinations, Room N–5700, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, ‘‘Attention: Application No. D–11819, Credit Suisse AG Exemption Hearing.’’ Copies of your mailed submission may also be sent by electronic mail to moffitt.betty@dol.gov or by FAX to (202) 219–0204 by the end of the scheduled submission period. The notice of hearing, the proposed exemption, and any submissions received in respect of either will be available for public inspection in the Public Documents Room of the Employee Benefits Security Administration, U.S. Department of Labor, Room N–1515, 200 Constitution Avenue NW., Washington, DC 20210. Comments, hearing requests, and other submissions will also be available online at www.regulations.gov, at no charge. Warning: If you submit a written request to be heard, do not include any personally identifiable information (such as name, address, or other contact VerDate Sep<11>2014 17:27 Nov 17, 2014 Jkt 235001 information) or confidential business information that you do not want publicly disclosed. All hearing requests may be posted on the Internet and can be retrieved by most Internet search engines. The Department will prepare an agenda indicating the order of presentation of oral comments. The Department reserves the right to restrict the agenda to those commenters whose outlines contain information that is within the scope of the topics to be discussed at the hearing. In the absence of special circumstances, each commenter will be allotted ten minutes in which to complete his or her presentation. Information about the agenda may be obtained on or after January 8, 2015, by contacting Mr. Erin Hesse, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone (202) 693–8546 (this is not a toll-free phone number). Those individuals who make oral comments at the hearing should be prepared to answer questions regarding their comments. The hearing will be transcribed. Notice to Interested Persons Within fifteen (15) calendar days of publication of the Notice of Public Hearing (the Notice) in the Federal Register, Credit Suisse AG shall provide notice to all interested persons in the manner agreed upon by the Applicant and the Department. Such notification will contain a copy of this Notice, as published in the Federal Register, and a copy of the notice of proposed exemption for Credit Suisse AG, as published in the Federal Register at 79 FR 52365 on September 3, 2014. Notice of Public Hearing Notice is hereby given that a public hearing will be held on January 15, 2015, regarding a proposed exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974, as amended, and from certain taxes imposed by the Internal Revenue Code of 1986, as amended, for transactions involving certain affiliates of Credit Suisse AG and entities in which Credit Suisse AG owns a 5% or more interest but which are not themselves affiliates. The hearing will be held, beginning at 10:00 a.m., EST, in Room C–5320 at the Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 Signed at Washington, DC, this 12th day of November, 2014. Lyssa Hall, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. 2014–27174 Filed 11–17–14; 8:45 am] BILLING CODE 4510–29–P DEPARTMENT OF LABOR Employee Benefits Security Administration [Application No. D–11837] Notice of Proposed Exemption Involving Credit Suisse AG Located in Zurich, Switzerland Employee Benefits Security Administration, U.S. Department of Labor. ACTION: Notice of Proposed Exemption. AGENCY: This document contains a notice of pendency before the Department of Labor (the Department) of a proposed exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974, as amended (ERISA or the Act), and the Internal Revenue Code of 1986, as amended (the Code). This proposed exemption was developed by the Department on its own motion. If granted, the proposed exemption would increase, from one year to ten years, the period during which certain entities with specified relationships to Credit Suisse AG (hereinafter, Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs) may rely on prohibited transaction class exemption (PTE) 84– 14. Effective Date: If granted, this proposed exemption will be effective for the period of time starting on the date a final exemption, if any, is published in the Federal Exemption, and ending on the date that is ten years following the date a judgment of conviction against Credit Suisse AG 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 (the Conviction) is entered in the District Court for the Eastern District of Virginia in Case Number 1:14–cr–188–RBS. DATES: Written comments and requests for a public hearing on the proposed exemption should be submitted to the Department within 45 days from the date of publication of this Federal Register Notice. ADDRESSES: Comments and requests for a hearing should state: (1) The name, address, telephone number, and email SUMMARY: E:\FR\FM\18NON1.SGM 18NON1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices address of the person making the request, and (2) the nature of the person’s interest in the proposed exemption and the manner in which the person would be adversely affected by the exemption, if granted. A hearing may be requested by any interested person and must state: (1) The name, address, telephone number, and email address of the person making the request; (2) the nature of the person’s interest in the exemption and the manner in which the person would be adversely affected by the exemption; and (3) a statement of the issues to be addressed and a general description of the evidence to be presented at the hearing. The Department will grant a request for a hearing made in accordance with the requirements above where a hearing is necessary to fully explore material factual issues identified by the person requesting the hearing. A notice of such hearing shall be published by the Department in the Federal Register. The Department may decline to hold a hearing where: (1) The request for the hearing does not meet the requirements above; (2) the only issues identified for exploration at the hearing are matters of law; or (3) the factual issues identified can be fully explored through the submission of evidence in written (including electronic) form. All written comments and requests for a public hearing concerning the proposed exemption should be directed to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N–5700, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, Attention: Application No. D–11837. Interested persons may also submit comments and/or hearing requests to EBSA via email to moffitt.betty@dol.gov, by FAX to (202) 219–0204, or online through http:// www.regulations.gov. Any such comments or requests should be sent by the end of the scheduled comment period. The application regarding the proposed exemption and the comments received will be available for public inspection in the Public Disclosure Room of the Employee Benefits Security Administration, U.S. Department of Labor, Room N–1515, 200 Constitution Avenue NW., Washington, DC 20210. Comments and hearing requests will also be made available online through http://www.regulations.gov and www.dol.gov/ebsa at no charge. Warning: All comments received will be included in the public record without change and will be made available online at http:// www.regulations.gov and www.dol.gov/ VerDate Sep<11>2014 17:27 Nov 17, 2014 Jkt 235001 ebsa. The Department will endeavor to redact certain protected personal information, but it is possible that some such information may be disclosed. Therefore, if you submit a comment, the Department recommends that you include your name and other contact information in the body of your comment, but do not submit information that you consider to be confidential, or otherwise protected (such as Social Security number or an unlisted phone number) or confidential business information that you do not want publicly disclosed. Furthermore, if the Department cannot read your comment due to technical difficulties and cannot contact you for clarification, EBSA might not be able to consider your comment. Additionally, the http:// www.regulations.gov Web site is an ‘‘anonymous access’’ system, which means the Department will not know your identity or contact information unless you complete the applicable fields or provide it in the body of your comment. If you send an email directly to the Department without going through http://www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public record and made available on the Internet. FOR FURTHER INFORMATION CONTACT: Erin S. Hesse, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone (202) 693–8546. (This is not a toll-free number.) SUPPLEMENTARY INFORMATION: If this proposed exemption is granted, certain entities with specified relationships to Credit Suisse AG must satisfy additional conditions in order to rely on, for a period of ten years, the relief provided by PTE 84–14 (49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430 (October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and as amended at 75 FR 38837 (July 6, 2010)). The exemption is being proposed by the Department on its own motion. 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 section 4975(c)(2) of the Code to the Secretary of Labor. Summary of Facts and Representations 1. On September 3, 2014, the Department published a proposed exemption for Application No. D– 11819, at 79 FR 52365 (the First Proposed Exemption). Therein, the PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 68713 Department proposed relief for Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs to continue to utilize the relief set forth in PTE 84–14 for a period of ten years, if certain conditions are met, notwithstanding the failure of those entities to meet the requirement set forth in section I(g) of that class exemption.1 Following the issuance of that proposal, the Department received ten comments and four requests for a hearing. As described in a notice that appears elsewhere in today’s Federal Register, the Department will be holding a hearing on January 15, 2015, in connection with those requests (the Hearing). 2. Given the upcoming Hearing and the possibility that new, factually relevant information regarding the transactions described in the First Proposed Exemption may be forthcoming, the Department is currently unable to make a final determination that relief for a ten year period is warranted. However, the Department is aware, based on representations from Credit Suisse AG, that plans and IRAs managed by Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs may incur certain costs or losses to the extent relief under PTE 84–14 is suddenly unavailable on the date of the Conviction, which is tentatively scheduled for November 21, 2014. To prevent plans and IRAs from incurring such costs and losses, the Department is issuing in today’s Federal Register a temporary final exemption that permits Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs to continue to utilize the relief in PTE 84– 14 for one year following the Conviction. This one year period is intended to be no longer than necessary for the Department to determine whether more permanent relief (i.e., the ten year period described herein) is warranted. Any such determination will be based on the entirety of the record attributable to this proposed exemption, which will include comments received from the Hearing and any comments received in connection with the publication of this proposed exemption. 3. In issuing the First Proposed Exemption, the Department had tentatively determined that it would be in the interest of affected plans and 1 Section I(g) generally provides that ‘‘[n]either the QPAM nor any affiliate thereof . . . nor any owner . . . of a 5 percent or more interest in the QPAM is a person who within the 10 years immediately preceding the transaction has been either convicted or released from imprisonment, whichever is later, as a result of’’ certain felonies including income tax evasion and conspiracy or attempt to commit income tax evasion. E:\FR\FM\18NON1.SGM 18NON1 68714 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices IRAs to permit Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs to continue to rely on PTE 84– 14 for a period of ten years, to the extent certain additional conditions are met. This proposed exemption, if granted, would provide substantially the same relief described in the First Proposed Exemption, subject to substantially the same conditions. Accordingly, interested persons are directed to the First Proposed Exemption for the Department’s views regarding the scope of relief and the adequacy of the conditions contained herein. The Department notes that it will only grant a final exemption to the extent it first finds that such relief is protective of, and in the interest of, affected plans and IRAs, and administratively feasible. tkelley on DSK3SPTVN1PROD with NOTICES Notice to Interested Persons Notice of the proposed exemption (the Notice) will be provided to all interested persons within fifteen (15) days of publication of the Notice in the Federal Register. The Notice will be provided to all interested persons in the manner agreed upon by the Applicant and the Department. Such notification will contain a copy of the Notice, as published in the Federal Register, and a supplemental statement, as required, pursuant to 29 CFR 2570.43(a)(2). The supplemental statement will inform all interested persons of their right to comment on and to request a hearing with respect to the pending exemption. All written comments and/or requests for a hearing must be received by the Department within forty-five (45) days of the publication of the Notice in the Federal Register. All comments will be made available to the public. Warning: If you submit a comment, EBSA recommends that you include your name and other contact information in the body of your comment, but DO NOT submit information that you consider to be confidential, or otherwise protected (such as Social Security number or an unlisted phone number) or confidential business information that you do not want publicly disclosed. All comments may be posted on the Internet and can be retrieved by most Internet search engines. 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 section 408(a) of the Act and/or section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions of the Act and/or the Code, VerDate Sep<11>2014 17:27 Nov 17, 2014 Jkt 235001 including any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, 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 section 404(a)(1)(B) of the Act; nor does it affect the requirement of section 401(a) of the Code 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 section 408(a) of the Act and/or section 4975(c)(2) of the Code, 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 proposed exemption, if granted, will be supplemental to, and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transitional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and (4) The proposed exemption, if granted, will be subject to the express condition that the material facts and representations contained in the application are true and complete, and that the application accurately describes all material terms of the transaction which is the subject of the exemption. Proposed Exemption Based on the foregoing facts, and those published in the Notice of Proposed Exemption at 79 FR 52365, the Department is considering granting an exemption under the authority of section 408(a) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and section 4975(c)(2) of the Internal Revenue Code of 1986, as amended (the Code), and in accordance with the procedures set forth in 29 CFR part 2570, Subpart B (76 FR 66637, 66644, October 27, 2011).2 Section I: Covered Transactions The Credit Suisse Affiliated QPAMs and the Credit Suisse Related QPAMs shall not be precluded from relying on the relief provided by Prohibited 2 For purposes of this proposed exemption, references to section 406 of ERISA should be read to refer as well to the corresponding provisions of section 4975 of the Code. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 Transaction Class Exemption (PTE) 84– 14 3 notwithstanding the Conviction (as defined in Section II(c)),4 provided the following conditions are satisfied: (a) Any failure of the Credit Suisse Affiliated QPAMs or the Credit Suisse Related QPAMs to satisfy Section I(g) of PTE 84–14 arose solely from the Conviction; (b) The Credit Suisse Affiliated QPAMs and the Credit Suisse Related QPAMs (including officers, directors, agents other than Credit Suisse AG, and employees of such QPAMs) did not participate in the criminal conduct of Credit Suisse AG that is the subject of the Conviction; (c) The Credit Suisse Affiliated QPAMs and the Credit Suisse Related QPAMs did not directly receive compensation in connection with the criminal conduct of Credit Suisse AG that is the subject of the Conviction; (d) The criminal conduct of Credit Suisse AG that is the subject of the Conviction did not directly or indirectly involve the assets of any plan subject to Part 4 of Title I of ERISA (an ERISAcovered plan) or section 4975 of the Code (an IRA); (e) Credit Suisse AG did not provide any fiduciary services to ERISA-covered plans or IRAs, except in connection with securities lending services of the New York Branch of Credit Suisse AG, or act as a QPAM for ERISA-covered plans or IRAs; (f) A Credit Suisse Affiliated QPAM will not 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 and managed by such Credit Suisse Affiliated QPAM to enter into any transaction with Credit Suisse AG or engage Credit Suisse AG to provide additional services to such investment fund, for a direct or indirect fee borne by such investment fund regardless of whether such transactions or services may otherwise be within the scope of relief provided by an administrative or statutory exemption; (g) Each Credit Suisse Affiliated QPAM will ensure that none of its employees or agents, if any, that were involved in the criminal conduct that underlies the Conviction will engage in 3 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430 (October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and as amended at 75 FR 38837 (July 6, 2010). 4 Section I(g) generally provides that ‘‘[n]either the QPAM nor any affiliate thereof . . . nor any owner . . . of a 5 percent or more interest in the QPAM is a person who within the 10 years immediately preceding the transaction has been either convicted or released from imprisonment, whichever is later, as a result of’’ certain felonies including income tax evasion and conspiracy or attempt to commit income tax evasion. E:\FR\FM\18NON1.SGM 18NON1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices transactions on behalf of any ‘‘investment fund’’ (as defined in Section VI(b) of PTE 84–14) subject to ERISA and managed by such Credit Suisse Affiliated QPAMs; (h)(1) Each Credit Suisse Affiliated QPAM immediately develops, implements, maintains, and follows written policies (the Policies) requiring and reasonably designed to ensure that: (i) The asset management decisions of the Credit Suisse Affiliated QPAMs are conducted independently of Credit Suisse AG’s management and business activities; (ii) the Credit Suisse Affiliated QPAM fully complies with ERISA’s fiduciary duties and ERISA and the Code’s prohibited transaction provisions and does not knowingly participate in any violations of these duties and provisions with respect to ERISA-covered plans and IRAs; (iii) the Credit Suisse Affiliated QPAM does not knowingly participate in any other person’s violation of ERISA or the Code with respect to ERISA-covered plans and IRAs; (iv) any filings or statements made by the Credit Suisse Affiliated QPAM to regulators, including but not limited to, the Department of Labor, the Department of the Treasury, the Department of Justice, and the Pension Benefit Guaranty Corporation, on behalf of ERISA-covered plans or IRAs are materially accurate and complete, to the best of such QPAM’s knowledge at that time; (v) the Credit Suisse Affiliated QPAM does not make material misrepresentations or omit material information in its communications with such regulators with respect to ERISAcovered plans or IRAs, or make material misrepresentations or omit material information in its communications with ERISA-covered plan and IRA clients; (vi) the Credit Suisse Affiliated QPAM complies with the terms of this exemption; and (vii) any violations of or failure to comply with items (ii) through (vi) are corrected promptly upon discovery and any such violations or compliance failures not promptly corrected are reported, upon discovering the failure to promptly correct, in writing to appropriate corporate officers, the head of Compliance and the General Counsel of the relevant Credit Suisse Affiliated QPAM, the independent auditor responsible for reviewing compliance with the Policies, and a fiduciary of any affected ERISA-covered plan or IRA where such fiduciary is independent of Credit Suisse AG; however, with respect to any ERISAcovered plan or IRA sponsored by an ‘‘affiliate’’ (as defined in Section VI(d) of PTE 84–14) of Credit Suisse AG or beneficially owned by an employee of VerDate Sep<11>2014 17:27 Nov 17, 2014 Jkt 235001 Credit Suisse AG or its affiliates, such fiduciary does not need to be independent of Credit Suisse AG; Credit Suisse Affiliated QPAMs will not be treated as having failed to develop, implement, maintain, or follow the Policies, provided that they correct any instances of noncompliance promptly when discovered or when they reasonably should have known of the noncompliance (whichever is earlier), and provided that they adhere to the reporting requirements set forth in this item (vii); (2) Each Credit Suisse Affiliated QPAM immediately develops and implements a program of training (the Training), conducted at least annually for relevant Credit Suisse Affiliated QPAM asset management, legal, compliance, and internal audit personnel; the Training shall be set forth in the Policies and, at a minimum, covers the Policies, ERISA and Code compliance (including applicable fiduciary duties and the prohibited transaction provisions) and ethical conduct, the consequences for not complying with the conditions of this exemption, (including the loss of the exemptive relief provided herein), and prompt reporting of wrongdoing; (i)(1) Each Credit Suisse Affiliated QPAM submits to an audit conducted annually by an independent auditor, who has been prudently selected and who has appropriate technical training and proficiency with ERISA to evaluate the adequacy of, and compliance with, the Policies and Training described in paragraph (h); the first of the audits must be completed no later than twelve (12) months after the date of Conviction and must cover the first six-month period that begins on the date of Conviction; all subsequent audits must cover the following corresponding twelve-month periods and be completed no later than six (6) months after the period to which it applies; (2) The auditor’s engagement shall specifically require the auditor to determine whether each Credit Suisse Affiliated QPAM has developed, implemented, maintained, and followed Policies in accordance with the conditions of this exemption and developed and implemented the Training, as required herein; (3) The auditor’s engagement shall specifically require the auditor to test each Credit Suisse Affiliated QPAM’s operational compliance with the Policies and Training; (4) For each audit, the auditor shall issue a written report (the Audit Report) to Credit Suisse AG and the Credit Suisse Affiliated QPAM to which the audit applies that describes the steps PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 68715 performed by the auditor during the course of its examination. The Audit Report shall include the auditor’s specific determinations regarding the adequacy of the Policies and Training; the auditor’s recommendations (if any) with respect to strengthening such Policies and Training; and any instances of the respective Credit Suisse Affiliated QPAM’s noncompliance with the written Policies and Training described in paragraph (h) above. Any determinations made by the auditor regarding 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 Credit Suisse Affiliated QPAM shall be promptly addressed by such Credit Suisse Affiliated QPAM, and any actions taken by such Credit Suisse Affiliated QPAM to address such recommendations shall be included in an addendum to the Audit Report. Any determinations by the auditor that the respective Credit Suisse Affiliated QPAM has implemented, maintained, and followed sufficient Policies and Training shall not be based solely or in substantial part on an absence of evidence indicating noncompliance; (5) The auditor shall notify the respective Credit Suisse Affiliated QPAM of any instances 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. Upon request, the auditor shall provide OED with all of the relevant workpapers reflecting any instances of noncompliance. The workpapers shall include an explanation of any corrective or remedial actions taken by the respective Credit Suisse Affiliated QPAM; (6) With respect to each Audit Report, an executive officer of the Credit Suisse Affiliated QPAM to which the Audit Report applies certifies in writing, under penalty of perjury, that the officer has reviewed the Audit Report and this exemption; addressed, corrected, or remediated any inadequacies identified in the Audit Report; and determined that 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; (7) An executive officer of Credit Suisse AG reviews the Audit Report for each Credit Suisse Affiliated QPAM and certifies in writing, under penalty of perjury, that such officer has reviewed each Audit Report; E:\FR\FM\18NON1.SGM 18NON1 tkelley on DSK3SPTVN1PROD with NOTICES 68716 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices (8) Each Credit Suisse Affiliated QPAM provides its certified Audit Report to the Department’s Office of Exemption Determinations (OED), Room N–5700, 200 Constitution Avenue NW., Washington DC 20210, no later than 30 days following its completion, and each Credit Suisse Affiliated QPAM makes its Audit Report unconditionally available for examination by any duly authorized employee or representative of the Department, other relevant regulators, and any fiduciary of an ERISA-covered plan or IRA, the assets of which are managed by such Credit Suisse Affiliated QPAM; (j) The Credit Suisse Affiliated QPAMs comply with each condition of PTE 84–14, as amended, with the sole exception of the violation of Section I(g) that is attributable to the Conviction; (k) Effective from the date of publication of any granted exemption in the Federal Register, with respect to each ERISA-covered plan or IRA for which a Credit Suisse Affiliated QPAM provides asset management or other discretionary fiduciary services, each Credit Suisse Affiliated QPAM agrees: (1) To comply with ERISA and the Code, as applicable to the particular ERISA-covered plan or IRA, and refrain from engaging in prohibited transactions; (2) not to waive, limit, or qualify the liability of the Credit Suisse Affiliated QPAM for knowingly violating ERISA or the Code or engaging in prohibited transactions; (3) not to require the ERISA-covered plan or IRA (or sponsor of such ERISA-covered plan or beneficial owner of such IRA) to indemnify the Credit Suisse Affiliated QPAM for violating ERISA or engaging in prohibited transactions, except for violations or prohibited transactions caused by an error, misrepresentation, or misconduct of a plan fiduciary or other party hired by the plan fiduciary who is independent of Credit Suisse AG; (4) not to restrict the ability of such ERISA-covered plan or IRA to terminate or withdraw from its arrangement with the Credit Suisse Affiliated QPAM; and (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 like manner to all such investors. Within six (6) months of the date of publication of a VerDate Sep<11>2014 17:27 Nov 17, 2014 Jkt 235001 granted exemption in the Federal Register, each Credit Suisse Affiliated QPAM will provide a notice to such effect to each ERISA-covered plan or IRA for which a Credit Suisse Affiliated QPAM provides asset management or other discretionary fiduciary services; (l) If a final exemption is granted in the Federal Register, each Credit Suisse 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 such Credit Suisse Affiliated QPAM relies upon the relief in the exemption; (m)(1) Each sponsor of an ERISAcovered plan and each beneficial owner of an IRA invested in an investment fund managed by a Credit Suisse Affiliated QPAM, or the sponsor of an investment fund in any case where a Credit Suisse Affiliated QPAM acts only as a sub-advisor to the investment fund; (2) each entity that may be a Credit Suisse Related QPAM; and (3) each ERISA-covered plan for which the New York Branch of Credit Suisse AG provides fiduciary securities lending services, receives a notice of the proposed exemption along with a separate summary describing the facts that led to the Conviction, which has been submitted to the Department, and a prominently displayed statement that the Conviction results in a failure to meet a condition in PTE 84–14; (n) A Credit Suisse Affiliated QPAM will not fail to meet the terms of this exemption solely because a Credit Suisse Related QPAM or a different Credit Suisse Affiliated QPAM fails to satisfy a condition for relief under this exemption. A Credit Suisse Related QPAM will not fail to meet the terms of this exemption solely because Credit Suisse AG, a Credit Suisse Affiliated QPAM, or a different Credit Suisse Related QPAM fails to satisfy a condition for relief under this exemption. Section II: Definitions (a) The term ‘‘Credit Suisse Affiliated QPAM’’ means a ‘‘qualified professional asset manager’’ (as defined in section VI(a) 5 of PTE 84–14) that relies on the relief provided by PTE 84–14 and with respect to which Credit Suisse AG is a current or future ‘‘affiliate’’ (as defined in section VI(d) of PTE 84–14). The term 5 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. PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 ‘‘Credit Suisse Affiliated QPAM’’ excludes the parent entity, Credit Suisse AG. (b) The term ‘‘Credit Suisse 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 Credit Suisse AG owns a direct or indirect five percent or more interest, but with respect to which Credit Suisse AG is not an ‘‘affiliate’’ (as defined in section VI(d) of PTE 84–14). (c) The term ‘‘Conviction’’ means the judgment of conviction against Credit Suisse AG 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, which is scheduled to be entered in the District Court for the Eastern District of Virginia in Case Number 1:14-cr-188–RBS. Signed at Washington, DC, this 12th day of November, 2014. Lyssa Hall, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. 2014–27173 Filed 11–17–14; 8:45 am] BILLING CODE 4510–29–P DEPARTMENT OF LABOR Employee Benefits Security Administration [Prohibited Transaction Exemption 2014– 11; Application No. D–11819] Notice of Exemption Involving Credit Suisse AG (Hereinafter, Either CSAG or the Applicant) Located in Zurich, Switzerland Employee Benefits Security Administration, U.S. Department of Labor. ACTION: Notice of Temporary Exemption. AGENCY: This document contains a notice of temporary exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974, as amended (ERISA or the Act), and the Internal Revenue Code of 1986, as amended (the Code). The exemption would affect the ability of certain entities with specified relationships to CSAG to continue to rely upon the relief provided by Prohibited Transaction Class Exemption 84–14 for a period of one year from the date of publication of this notice. DATES: Effective Date: This temporary exemption will be effective as of the date a judgment of conviction against SUMMARY: E:\FR\FM\18NON1.SGM 18NON1

Agencies

[Federal Register Volume 79, Number 222 (Tuesday, November 18, 2014)]
[Notices]
[Pages 68712-68716]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27173]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. D-11837]


Notice of Proposed Exemption Involving Credit Suisse AG Located 
in Zurich, Switzerland

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Notice of Proposed Exemption.

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SUMMARY: This document contains a notice of pendency before the 
Department of Labor (the Department) of a proposed exemption from 
certain prohibited transaction restrictions of the Employee Retirement 
Income Security Act of 1974, as amended (ERISA or the Act), and the 
Internal Revenue Code of 1986, as amended (the Code). This proposed 
exemption was developed by the Department on its own motion. If 
granted, the proposed exemption would increase, from one year to ten 
years, the period during which certain entities with specified 
relationships to Credit Suisse AG (hereinafter, Credit Suisse 
Affiliated QPAMs and Credit Suisse Related QPAMs) may rely on 
prohibited transaction class exemption (PTE) 84-14.
    Effective Date: If granted, this proposed exemption will be 
effective for the period of time starting on the date a final 
exemption, if any, is published in the Federal Exemption, and ending on 
the date that is ten years following the date a judgment of conviction 
against Credit Suisse AG 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 (the Conviction) is entered in the District 
Court for the Eastern District of Virginia in Case Number 1:14-cr-188-
RBS.

DATES: Written comments and requests for a public hearing on the 
proposed exemption should be submitted to the Department within 45 days 
from the date of publication of this Federal Register Notice.

ADDRESSES: Comments and requests for a hearing should state: (1) The 
name, address, telephone number, and email

[[Page 68713]]

address of the person making the request, and (2) the nature of the 
person's interest in the proposed exemption and the manner in which the 
person would be adversely affected by the exemption, if granted. A 
hearing may be requested by any interested person and must state: (1) 
The name, address, telephone number, and email address of the person 
making the request; (2) the nature of the person's interest in the 
exemption and the manner in which the person would be adversely 
affected by the exemption; and (3) a statement of the issues to be 
addressed and a general description of the evidence to be presented at 
the hearing. The Department will grant a request for a hearing made in 
accordance with the requirements above where a hearing is necessary to 
fully explore material factual issues identified by the person 
requesting the hearing. A notice of such hearing shall be published by 
the Department in the Federal Register. The Department may decline to 
hold a hearing where: (1) The request for the hearing does not meet the 
requirements above; (2) the only issues identified for exploration at 
the hearing are matters of law; or (3) the factual issues identified 
can be fully explored through the submission of evidence in written 
(including electronic) form.
    All written comments and requests for a public hearing concerning 
the proposed exemption should be directed to the Office of Exemption 
Determinations, Employee Benefits Security Administration, Room N-5700, 
U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 
20210, Attention: Application No. D-11837. Interested persons may also 
submit comments and/or hearing requests to EBSA via email to 
moffitt.betty@dol.gov, by FAX to (202) 219-0204, or online through 
http://www.regulations.gov. Any such comments or requests should be 
sent by the end of the scheduled comment period. The application 
regarding the proposed exemption and the comments received will be 
available for public inspection in the Public Disclosure Room of the 
Employee Benefits Security Administration, U.S. Department of Labor, 
Room N-1515, 200 Constitution Avenue NW., Washington, DC 20210. 
Comments and hearing requests will also be made available online 
through http://www.regulations.gov and www.dol.gov/ebsa at no charge.
    Warning: All comments received will be included in the public 
record without change and will be made available online at http://www.regulations.gov and www.dol.gov/ebsa. The Department will endeavor 
to redact certain protected personal information, but it is possible 
that some such information may be disclosed. Therefore, if you submit a 
comment, the Department recommends that you include your name and other 
contact information in the body of your comment, but do not submit 
information that you consider to be confidential, or otherwise 
protected (such as Social Security number or an unlisted phone number) 
or confidential business information that you do not want publicly 
disclosed. Furthermore, if the Department cannot read your comment due 
to technical difficulties and cannot contact you for clarification, 
EBSA might not be able to consider your comment. Additionally, the 
http://www.regulations.gov Web site is an ``anonymous access'' system, 
which means the Department will not know your identity or contact 
information unless you complete the applicable fields or provide it in 
the body of your comment. If you send an email directly to the 
Department without going through http://www.regulations.gov, your email 
address will be automatically captured and included as part of the 
comment that is placed in the public record and made available on the 
Internet.

FOR FURTHER INFORMATION CONTACT: Erin S. Hesse, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor, telephone (202) 693-8546. (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: If this proposed exemption is granted, 
certain entities with specified relationships to Credit Suisse AG must 
satisfy additional conditions in order to rely on, for a period of ten 
years, the relief provided by PTE 84-14 (49 FR 9494 (March 13, 1984), 
as corrected at 50 FR 41430 (October 10, 1985), as amended at 70 FR 
49305 (August 23, 2005), and as amended at 75 FR 38837 (July 6, 2010)). 
The exemption is being proposed by the Department on its own motion. 
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 
section 4975(c)(2) of the Code to the Secretary of Labor.

Summary of Facts and Representations

    1. On September 3, 2014, the Department published a proposed 
exemption for Application No. D-11819, at 79 FR 52365 (the First 
Proposed Exemption). Therein, the Department proposed relief for Credit 
Suisse Affiliated QPAMs and Credit Suisse Related QPAMs to continue to 
utilize the relief set forth in PTE 84-14 for a period of ten years, if 
certain conditions are met, notwithstanding the failure of those 
entities to meet the requirement set forth in section I(g) of that 
class exemption.\1\ Following the issuance of that proposal, the 
Department received ten comments and four requests for a hearing. As 
described in a notice that appears elsewhere in today's Federal 
Register, the Department will be holding a hearing on January 15, 2015, 
in connection with those requests (the Hearing).
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    \1\ Section I(g) generally provides that ``[n]either the QPAM 
nor any affiliate thereof . . . nor any owner . . . of a 5 percent 
or more interest in the QPAM is a person who within the 10 years 
immediately preceding the transaction has been either convicted or 
released from imprisonment, whichever is later, as a result of'' 
certain felonies including income tax evasion and conspiracy or 
attempt to commit income tax evasion.
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    2. Given the upcoming Hearing and the possibility that new, 
factually relevant information regarding the transactions described in 
the First Proposed Exemption may be forthcoming, the Department is 
currently unable to make a final determination that relief for a ten 
year period is warranted. However, the Department is aware, based on 
representations from Credit Suisse AG, that plans and IRAs managed by 
Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs may 
incur certain costs or losses to the extent relief under PTE 84-14 is 
suddenly unavailable on the date of the Conviction, which is 
tentatively scheduled for November 21, 2014. To prevent plans and IRAs 
from incurring such costs and losses, the Department is issuing in 
today's Federal Register a temporary final exemption that permits 
Credit Suisse Affiliated QPAMs and Credit Suisse Related QPAMs to 
continue to utilize the relief in PTE 84-14 for one year following the 
Conviction. This one year period is intended to be no longer than 
necessary for the Department to determine whether more permanent relief 
(i.e., the ten year period described herein) is warranted. Any such 
determination will be based on the entirety of the record attributable 
to this proposed exemption, which will include comments received from 
the Hearing and any comments received in connection with the 
publication of this proposed exemption.
    3. In issuing the First Proposed Exemption, the Department had 
tentatively determined that it would be in the interest of affected 
plans and

[[Page 68714]]

IRAs to permit Credit Suisse Affiliated QPAMs and Credit Suisse Related 
QPAMs to continue to rely on PTE 84-14 for a period of ten years, to 
the extent certain additional conditions are met. This proposed 
exemption, if granted, would provide substantially the same relief 
described in the First Proposed Exemption, subject to substantially the 
same conditions. Accordingly, interested persons are directed to the 
First Proposed Exemption for the Department's views regarding the scope 
of relief and the adequacy of the conditions contained herein. The 
Department notes that it will only grant a final exemption to the 
extent it first finds that such relief is protective of, and in the 
interest of, affected plans and IRAs, and administratively feasible.

Notice to Interested Persons

    Notice of the proposed exemption (the Notice) will be provided to 
all interested persons within fifteen (15) days of publication of the 
Notice in the Federal Register. The Notice will be provided to all 
interested persons in the manner agreed upon by the Applicant and the 
Department. Such notification will contain a copy of the Notice, as 
published in the Federal Register, and a supplemental statement, as 
required, pursuant to 29 CFR 2570.43(a)(2). The supplemental statement 
will inform all interested persons of their right to comment on and to 
request a hearing with respect to the pending exemption.
    All written comments and/or requests for a hearing must be received 
by the Department within forty-five (45) days of the publication of the 
Notice in the Federal Register.
    All comments will be made available to the public. Warning: If you 
submit a comment, EBSA recommends that you include your name and other 
contact information in the body of your comment, but DO NOT submit 
information that you consider to be confidential, or otherwise 
protected (such as Social Security number or an unlisted phone number) 
or confidential business information that you do not want publicly 
disclosed. All comments may be posted on the Internet and can be 
retrieved by most Internet search engines.

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 section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, 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 section 404(a)(1)(B) of the Act; nor does it affect 
the requirement of section 401(a) of the Code 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 section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, 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 proposed exemption, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemption, if granted, will be subject to the 
express condition that the material facts and representations contained 
in the application are true and complete, and that the application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

Proposed Exemption

    Based on the foregoing facts, and those published in the Notice of 
Proposed Exemption at 79 FR 52365, the Department is considering 
granting an exemption under the authority of section 408(a) of the 
Employee Retirement Income Security Act of 1974, as amended (ERISA), 
and section 4975(c)(2) of the Internal Revenue Code of 1986, as amended 
(the Code), and in accordance with the procedures set forth in 29 CFR 
part 2570, Subpart B (76 FR 66637, 66644, October 27, 2011).\2\
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    \2\ For purposes of this proposed exemption, references to 
section 406 of ERISA should be read to refer as well to the 
corresponding provisions of section 4975 of the Code.
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Section I: Covered Transactions

    The Credit Suisse Affiliated QPAMs and the Credit Suisse Related 
QPAMs shall not be precluded from relying on the relief provided by 
Prohibited Transaction Class Exemption (PTE) 84-14 \3\ notwithstanding 
the Conviction (as defined in Section II(c)),\4\ provided the following 
conditions are satisfied:
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    \3\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430 
(October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and 
as amended at 75 FR 38837 (July 6, 2010).
    \4\ Section I(g) generally provides that ``[n]either the QPAM 
nor any affiliate thereof . . . nor any owner . . . of a 5 percent 
or more interest in the QPAM is a person who within the 10 years 
immediately preceding the transaction has been either convicted or 
released from imprisonment, whichever is later, as a result of'' 
certain felonies including income tax evasion and conspiracy or 
attempt to commit income tax evasion.
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    (a) Any failure of the Credit Suisse Affiliated QPAMs or the Credit 
Suisse Related QPAMs to satisfy Section I(g) of PTE 84-14 arose solely 
from the Conviction;
    (b) The Credit Suisse Affiliated QPAMs and the Credit Suisse 
Related QPAMs (including officers, directors, agents other than Credit 
Suisse AG, and employees of such QPAMs) did not participate in the 
criminal conduct of Credit Suisse AG that is the subject of the 
Conviction;
    (c) The Credit Suisse Affiliated QPAMs and the Credit Suisse 
Related QPAMs did not directly receive compensation in connection with 
the criminal conduct of Credit Suisse AG that is the subject of the 
Conviction;
    (d) The criminal conduct of Credit Suisse AG that is the subject of 
the Conviction did not directly or indirectly involve the assets of any 
plan subject to Part 4 of Title I of ERISA (an ERISA-covered plan) or 
section 4975 of the Code (an IRA);
    (e) Credit Suisse AG did not provide any fiduciary services to 
ERISA-covered plans or IRAs, except in connection with securities 
lending services of the New York Branch of Credit Suisse AG, or act as 
a QPAM for ERISA-covered plans or IRAs;
    (f) A Credit Suisse Affiliated QPAM will not 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 and managed by such Credit 
Suisse Affiliated QPAM to enter into any transaction with Credit Suisse 
AG or engage Credit Suisse AG to provide additional services to such 
investment fund, for a direct or indirect fee borne by such investment 
fund regardless of whether such transactions or services may otherwise 
be within the scope of relief provided by an administrative or 
statutory exemption;
    (g) Each Credit Suisse Affiliated QPAM will ensure that none of its 
employees or agents, if any, that were involved in the criminal conduct 
that underlies the Conviction will engage in

[[Page 68715]]

transactions on behalf of any ``investment fund'' (as defined in 
Section VI(b) of PTE 84-14) subject to ERISA and managed by such Credit 
Suisse Affiliated QPAMs;
    (h)(1) Each Credit Suisse Affiliated QPAM immediately develops, 
implements, maintains, and follows written policies (the Policies) 
requiring and reasonably designed to ensure that: (i) The asset 
management decisions of the Credit Suisse Affiliated QPAMs are 
conducted independently of Credit Suisse AG's management and business 
activities; (ii) the Credit Suisse Affiliated QPAM fully complies with 
ERISA's fiduciary duties and ERISA and the Code's prohibited 
transaction provisions and does not knowingly participate in any 
violations of these duties and provisions with respect to ERISA-covered 
plans and IRAs; (iii) the Credit Suisse Affiliated QPAM does not 
knowingly participate in any other person's violation of ERISA or the 
Code with respect to ERISA-covered plans and IRAs; (iv) any filings or 
statements made by the Credit Suisse Affiliated QPAM to regulators, 
including but not limited to, the Department of Labor, the Department 
of the Treasury, the Department of Justice, and the Pension Benefit 
Guaranty Corporation, on behalf of ERISA-covered plans or IRAs are 
materially accurate and complete, to the best of such QPAM's knowledge 
at that time; (v) the Credit Suisse Affiliated QPAM does not make 
material misrepresentations or omit material information in its 
communications with such regulators with respect to ERISA-covered plans 
or IRAs, or make material misrepresentations or omit material 
information in its communications with ERISA-covered plan and IRA 
clients; (vi) the Credit Suisse Affiliated QPAM complies with the terms 
of this exemption; and (vii) any violations of or failure to comply 
with items (ii) through (vi) are corrected promptly upon discovery and 
any such violations or compliance failures not promptly corrected are 
reported, upon discovering the failure to promptly correct, in writing 
to appropriate corporate officers, the head of Compliance and the 
General Counsel of the relevant Credit Suisse Affiliated QPAM, the 
independent auditor responsible for reviewing compliance with the 
Policies, and a fiduciary of any affected ERISA-covered plan or IRA 
where such fiduciary is independent of Credit Suisse AG; however, with 
respect to any ERISA-covered plan or IRA sponsored by an ``affiliate'' 
(as defined in Section VI(d) of PTE 84-14) of Credit Suisse AG or 
beneficially owned by an employee of Credit Suisse AG or its 
affiliates, such fiduciary does not need to be independent of Credit 
Suisse AG; Credit Suisse Affiliated QPAMs will not be treated as having 
failed to develop, implement, maintain, or follow the Policies, 
provided that they correct any instances of noncompliance promptly when 
discovered or when they reasonably should have known of the 
noncompliance (whichever is earlier), and provided that they adhere to 
the reporting requirements set forth in this item (vii);
    (2) Each Credit Suisse Affiliated QPAM immediately develops and 
implements a program of training (the Training), conducted at least 
annually for relevant Credit Suisse Affiliated QPAM asset management, 
legal, compliance, and internal audit personnel; the Training shall be 
set forth in the Policies and, at a minimum, covers the Policies, ERISA 
and Code compliance (including applicable fiduciary duties and the 
prohibited transaction provisions) and ethical conduct, the 
consequences for not complying with the conditions of this exemption, 
(including the loss of the exemptive relief provided herein), and 
prompt reporting of wrongdoing;
    (i)(1) Each Credit Suisse Affiliated QPAM submits to an audit 
conducted annually by an independent auditor, who has been prudently 
selected and who has appropriate technical training and proficiency 
with ERISA to evaluate the adequacy of, and compliance with, the 
Policies and Training described in paragraph (h); the first of the 
audits must be completed no later than twelve (12) months after the 
date of Conviction and must cover the first six-month period that 
begins on the date of Conviction; all subsequent audits must cover the 
following corresponding twelve-month periods and be completed no later 
than six (6) months after the period to which it applies;
    (2) The auditor's engagement shall specifically require the auditor 
to determine whether each Credit Suisse Affiliated QPAM has developed, 
implemented, maintained, and followed Policies in accordance with the 
conditions of this exemption and developed and implemented the 
Training, as required herein;
    (3) The auditor's engagement shall specifically require the auditor 
to test each Credit Suisse Affiliated QPAM's operational compliance 
with the Policies and Training;
    (4) For each audit, the auditor shall issue a written report (the 
Audit Report) to Credit Suisse AG and the Credit Suisse Affiliated QPAM 
to which the audit applies that describes the steps performed by the 
auditor during the course of its examination. The Audit Report shall 
include the auditor's specific determinations regarding the adequacy of 
the Policies and Training; the auditor's recommendations (if any) with 
respect to strengthening such Policies and Training; and any instances 
of the respective Credit Suisse Affiliated QPAM's noncompliance with 
the written Policies and Training described in paragraph (h) above. Any 
determinations made by the auditor regarding 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 
Credit Suisse Affiliated QPAM shall be promptly addressed by such 
Credit Suisse Affiliated QPAM, and any actions taken by such Credit 
Suisse Affiliated QPAM to address such recommendations shall be 
included in an addendum to the Audit Report. Any determinations by the 
auditor that the respective Credit Suisse Affiliated QPAM has 
implemented, maintained, and followed sufficient Policies and Training 
shall not be based solely or in substantial part on an absence of 
evidence indicating noncompliance;
    (5) The auditor shall notify the respective Credit Suisse 
Affiliated QPAM of any instances 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. Upon request, the auditor shall provide OED 
with all of the relevant workpapers reflecting any instances of 
noncompliance. The workpapers shall include an explanation of any 
corrective or remedial actions taken by the respective Credit Suisse 
Affiliated QPAM;
    (6) With respect to each Audit Report, an executive officer of the 
Credit Suisse Affiliated QPAM to which the Audit Report applies 
certifies in writing, under penalty of perjury, that the officer has 
reviewed the Audit Report and this exemption; addressed, corrected, or 
remediated any inadequacies identified in the Audit Report; and 
determined that 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;
    (7) An executive officer of Credit Suisse AG reviews the Audit 
Report for each Credit Suisse Affiliated QPAM and certifies in writing, 
under penalty of perjury, that such officer has reviewed each Audit 
Report;

[[Page 68716]]

    (8) Each Credit Suisse Affiliated QPAM provides its certified Audit 
Report to the Department's Office of Exemption Determinations (OED), 
Room N-5700, 200 Constitution Avenue NW., Washington DC 20210, no later 
than 30 days following its completion, and each Credit Suisse 
Affiliated QPAM makes its Audit Report unconditionally available for 
examination by any duly authorized employee or representative of the 
Department, other relevant regulators, and any fiduciary of an ERISA-
covered plan or IRA, the assets of which are managed by such Credit 
Suisse Affiliated QPAM;
    (j) The Credit Suisse Affiliated QPAMs comply with each condition 
of PTE 84-14, as amended, with the sole exception of the violation of 
Section I(g) that is attributable to the Conviction;
    (k) Effective from the date of publication of any granted exemption 
in the Federal Register, with respect to each ERISA-covered plan or IRA 
for which a Credit Suisse Affiliated QPAM provides asset management or 
other discretionary fiduciary services, each Credit Suisse Affiliated 
QPAM agrees: (1) To comply with ERISA and the Code, as applicable to 
the particular ERISA-covered plan or IRA, and refrain from engaging in 
prohibited transactions; (2) not to waive, limit, or qualify the 
liability of the Credit Suisse Affiliated QPAM for knowingly violating 
ERISA or the Code or engaging in prohibited transactions; (3) not to 
require the ERISA-covered plan or IRA (or sponsor of such ERISA-covered 
plan or beneficial owner of such IRA) to indemnify the Credit Suisse 
Affiliated QPAM for violating ERISA or engaging in prohibited 
transactions, except for violations or prohibited transactions caused 
by an error, misrepresentation, or misconduct of a plan fiduciary or 
other party hired by the plan fiduciary who is independent of Credit 
Suisse AG; (4) not to restrict the ability of such ERISA-covered plan 
or IRA to terminate or withdraw from its arrangement with the Credit 
Suisse Affiliated QPAM; and (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 like 
manner to all such investors. Within six (6) months of the date of 
publication of a granted exemption in the Federal Register, each Credit 
Suisse Affiliated QPAM will provide a notice to such effect to each 
ERISA-covered plan or IRA for which a Credit Suisse Affiliated QPAM 
provides asset management or other discretionary fiduciary services;
    (l) If a final exemption is granted in the Federal Register, each 
Credit Suisse 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 such Credit 
Suisse Affiliated QPAM relies upon the relief in the exemption;
    (m)(1) Each sponsor of an ERISA-covered plan and each beneficial 
owner of an IRA invested in an investment fund managed by a Credit 
Suisse Affiliated QPAM, or the sponsor of an investment fund in any 
case where a Credit Suisse Affiliated QPAM acts only as a sub-advisor 
to the investment fund; (2) each entity that may be a Credit Suisse 
Related QPAM; and (3) each ERISA-covered plan for which the New York 
Branch of Credit Suisse AG provides fiduciary securities lending 
services, receives a notice of the proposed exemption along with a 
separate summary describing the facts that led to the Conviction, which 
has been submitted to the Department, and a prominently displayed 
statement that the Conviction results in a failure to meet a condition 
in PTE 84-14;
    (n) A Credit Suisse Affiliated QPAM will not fail to meet the terms 
of this exemption solely because a Credit Suisse Related QPAM or a 
different Credit Suisse Affiliated QPAM fails to satisfy a condition 
for relief under this exemption. A Credit Suisse Related QPAM will not 
fail to meet the terms of this exemption solely because Credit Suisse 
AG, a Credit Suisse Affiliated QPAM, or a different Credit Suisse 
Related QPAM fails to satisfy a condition for relief under this 
exemption.

Section II: Definitions

    (a) The term ``Credit Suisse Affiliated QPAM'' means a ``qualified 
professional asset manager'' (as defined in section VI(a) \5\ of PTE 
84-14) that relies on the relief provided by PTE 84-14 and with respect 
to which Credit Suisse AG is a current or future ``affiliate'' (as 
defined in section VI(d) of PTE 84-14). The term ``Credit Suisse 
Affiliated QPAM'' excludes the parent entity, Credit Suisse AG.
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    \5\ 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.
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    (b) The term ``Credit Suisse 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 Credit Suisse AG owns a direct or indirect 
five percent or more interest, but with respect to which Credit Suisse 
AG is not an ``affiliate'' (as defined in section VI(d) of PTE 84-14).
    (c) The term ``Conviction'' means the judgment of conviction 
against Credit Suisse AG 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, which is scheduled to be entered in the 
District Court for the Eastern District of Virginia in Case Number 
1:14-cr-188-RBS.

    Signed at Washington, DC, this 12th day of November, 2014.
Lyssa Hall,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2014-27173 Filed 11-17-14; 8:45 am]
BILLING CODE 4510-29-P