Exemption From Certain Prohibited Transaction Restrictions Involving UBS AG (UBS) and Credit Suisse Asset Management, LLC (CSAM), Located in Zurich, Switzerland, 36337-36348 [2023-11864]
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Federal Register / Vol. 88, No. 106 / Friday, June 2, 2023 / Notices
If additional information is required
contact: John R. Carlson, Department
Clearance Officer, United States
Department of Justice, Justice
Management Division, Policy and
Planning Staff, Two Constitution
Square, 145 N Street NE, Suite 3E.405B,
Washington, DC 20530.
Dated: May 25, 2023.
John R. Carlson,
Department Clearance Officer for PRA, U.S.
Department of Justice.
[FR Doc. 2023–11712 Filed 6–1–23; 8:45 am]
BILLING CODE 4410–02–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
[Prohibited Transaction Exemption 2023–
14; Exemption Application No. D–12089]
Exemption From Certain Prohibited
Transaction Restrictions Involving
UBS AG (UBS) and Credit Suisse Asset
Management, LLC (CSAM), Located in
Zurich, Switzerland
Employee Benefits Security
Administration, Labor.
ACTION: Notice of exemption.
AGENCY:
The Labor Department
previously issued several temporary
individual prohibited transaction
exemptions (PTEs) that allow certain
Qualified Professional Asset Managers
(QPAMs) related to UBS and Credit
Suisse Group AG (CSAG) (the UBS
QPAMs, CS Affiliated QPAMs, and the
CS Related QPAMs, as further defined
below) to continue to rely on the
exemptive relief provided by Prohibited
Transaction Class Exemption (PTE) 84–
14, notwithstanding five judgments of
convictions involving entities within
the UBS and CSAG corporate umbrellas,
as described below (the Convictions).
The most recent individual exemptions
are PTE 2020–01 (for UBS) and PTE
2022–01 (for CSAG). Those individual
exemptions will no longer be available
following the upcoming merger between
CSAG and UBS (the Merger), solely as
a result of the Merger. This exemption
allows the UBS QPAMs, CS Affiliated
QPAMs, and the CS Related QPAMs to
continue to rely on PTE 84–14 as of the
closing date of the Merger, if certain
conditions are met. This individual
exemption is necessary to preserve the
ability of the QPAMs to engage in the
transactions permitted by PTE 84–14,
which would be lost solely due to the
impending merger of UBS and Credit
Suisse (and not because of a new
conviction for either UBS or Credit
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SUMMARY:
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Suisse or their affiliates, or due to any
other disqualifying reason). This
exemption will be effective for one year
beginning on the closing date of the
Merger. The limited duration of this
exemption reflects the lack of
information UBS and Credit Suisse
Asset Management, LLC (CSAM)
submitted to the Department regarding
the effects the Merger will have on
Covered Plans with assets managed by
the UBS QPAMs and CS Affiliated and
Related QPAMs.
DATES: The exemption will be in effect
for a period of one year beginning on the
closing date of the Merger.
FOR FURTHER INFORMATION CONTACT: Mr.
Joseph Brennan of the Department at
(202) 693–8456. (This is not a toll-free
number.)
SUPPLEMENTARY INFORMATION: On May
12, 2023, the Department published a
notice of proposed exemption in the
Federal Register 1 permitting the UBS
QPAMs, CS Affiliated QPAMs, and the
CS Related QPAMs to continue to rely
on the exemptive relief provided by
Prohibited Transaction Class Exemption
(PTE) 84–14. The Department is
granting this exemption to ensure that
the participants and beneficiaries of
ERISA-covered Plans and IRAs managed
by the UBS QPAMs, CS Affiliated
QPAMs, and the CS Related QPAMs
(together, Covered Plans) are protected.
This exemption provides only the relief
specified in the text of the exemption
and does not provide relief from
violations of any law other than the
prohibited transaction provisions of
Title I of ERISA and the Code expressly
stated herein.
The Department intends for the terms
of this exemption to promote adherence
by the UBS QPAMs, CS Affiliated
QPAMs, and the CS Related QPAMs to
basic fiduciary standards under Title I
of ERISA and the Code. Most
importantly, the Department’s primary
objective in granting this time-limited
exemption is to ensure that Covered
Plans can terminate their relationships
with one of these QPAMs in an orderly
and cost-effective fashion in the event
the fiduciary of a Covered Plan
determines that it is prudent to do so.
Based on UBS and CSAM’s (the
Applicants’) adherence to all the
conditions of the exemption, the
Department makes the requisite findings
under ERISA Section 408(a) that the
exemption is: (1) administratively
feasible, (2) in the interest of Covered
Plans and their participants and
beneficiaries, and (3) protective of the
rights of the participants and
1 88
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beneficiaries of Covered Plans.
Accordingly, affected parties should be
aware that the conditions incorporated
in this exemption are, individually and
taken as a whole, necessary for the
Department to grant the relief requested
by the Applicants. Absent these or
similar conditions, the Department
would not have granted this exemption.
Further, non-compliance with any of
these conditions will result in loss of
the availability of this exemption.
Background
1. Credit Suisse Group AG (CSG) is
currently a publicly traded corporation
headquartered in Zurich, Switzerland
that owns a 100% interest in Credit
Suisse AG (CSAG). Currently, two
Credit Suisse asset management
affiliates, Credit Suisse Asset
Management, LLC (CSAM LLC) and
Credit Suisse Asset Management
Limited (CSAM Ltd.) (together, the CS
Affiliated QPAMs) manage the assets of
Covered Plans on a discretionary basis.
CSAG also owns a five percent or more
interest in certain other entities that
may provide investment management
services to plans but that are not
affiliates of CSAG (the CS Related
QPAMs).
2. UBS AG (UBS) is a Swiss-based
global financial services company
organized under the laws of
Switzerland. UBS Asset Management
(Americas) Inc., UBS Realty Investors
LLC, UBS Hedge Fund Solutions LLC,
and UBS O’Connor LLC are currently
the four UBS affiliates that rely on PTE
84–14 (the UBS QPAMs).
PTE 84–14
3. PTE 84–14 reflects the
Department’s conclusion that it could
provide broad relief from the prohibited
transaction provisions of ERISA Section
406(a) and Code Section 4975(c)(1) only
if the commitments and the investments
of plan assets and the negotiations
leading thereto are the sole
responsibility of an independent
discretionary manager that meets the
exemption’s conditions, known as a
QPAM.
4. Section I(g) of PTE 84–14 prevents
an entity that may otherwise meet the
definition of a QPAM from utilizing the
exemptive relief provided by PTE 84–14
for itself and its client plans, if that
entity or an ‘‘affiliate’’ thereof 2 or any
2 Section VI(d) of PTE 84–14 defines the term
‘‘affiliate’’ for purposes of Section I(g) as ‘‘(1) Any
person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under
common control with the person, (2) Any director
of, relative of, or partner in, any such person, (3)
Any corporation, partnership, trust or
FR 30785 (May 12, 2023).
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direct or indirect owner of a 5 percent
or more interest in the QPAM has
within 10 years immediately preceding
the transaction, been either convicted or
released from imprisonment, whichever
is later, as a result of criminal activity
described in that section.
5. The inclusion of Section I(g) in PTE
84–14 is, in part, based on an
expectation that QPAMs will maintain a
high standard of integrity. This
expectation extends not only to the
QPAM itself, but also to those who may
be in a position to influence the
QPAM’s policies.
6. Since 2014, various entities within
the corporate umbrellas of UBS and
CSAG have been collectively convicted
of five disqualifying crimes described in
Section I(g) of PTE 84–14 (the
Convictions). To protect Covered Plans
from the costs and harms that could
arise if the UBS QPAMs and the CS
Affiliated and CS Related QPAMs
suddenly lost their ability to engage in
potentially beneficial transactions under
PTE 84–14 due to these Convictions, the
Department issued a number of
temporary individual exemptions.3
7. On April 17, 2023, UBS and CSAM
(and their affiliated QPAMs) submitted
an application with the Department
requesting modifications to their
existing exemptions. In their request,
UBS and CSAM stated that, following
the Merger, ‘‘it is important that the
combined bank be able to continue the
asset management businesses that the
two banks currently maintain
independently, including their
subsidiaries’ QPAM services.’’ UBS and
CSAM requested ‘‘separate somewhat
harmonized, exemptions because at this
time it is not clear when, and how, the
Credit Suisse QPAMs will be
restructured within the UBS structure
after closing.’’ Essentially, in the
application, UBS and CSAM sought the
Department’s approval to allow the
affected QPAMs to continue relying on
unincorporated enterprise of which such person is
an officer, director, or a 5 percent or more partner
or owner, and (4) Any employee or officer of the
person who—(A) Is a highly compensated employee
(as defined in Section 4975(e)(2)(H) of the Code) or
officer (earning 10 percent or more of the yearly
wages of such person), or (B) Has direct or indirect
authority, responsibility or control regarding the
custody, management or disposition of plan assets.’’
3 In connection with the Credit Suisse-related
convictions, the Department issued the following
exemptions: PTE 2022–01 (87 FR 1186 (Jan. 10,
2022)); PTE 2019–07 (84 FR 61928 (Nov. 14, 2019));
PTE 2015–14 (80 FR 59817 (Oct. 2, 2015)); PTE
2014–11 (79 FR 68716 (Nov. 18, 2014)). In
connection with the UBS-related convictions, the
Department issued: PTE 2020–01 (85 FR 8020 (Feb.
12, 2020)); PTE 2019–01 (84 FR 6163 (Feb. 26,
2019)); PTE 2017–07 (82 FR 61903 (Dec. 29, 2017));
PTE 2016–17 (81 FR 94049 (Dec. 22, 2016)); PTE
2013–09 (78 FR 56740 (Sep. 13, 2013)).
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the terms and conditions of their
existing exemptions.
Harm to Covered Plans in the Absence
of QPAM Relief 4
8. CSAM represents that if the CS
Affiliated and Related QPAMs lose the
ability to rely upon PTE 84–14, the
Covered Plan clients of those QPAMs
would suffer the time and expense of
finding replacement asset managers
where they otherwise might not choose
to do so. Further, transactions currently
dependent on the QPAM Exemption
would be in default, and counterparties
may provide less advantageous pricing,
or not bid at all, because the plan’s
investment manager is not a QPAM.
CSAM submits that Covered Plans that
choose to remain with CSAM following
CSAM’s loss of QPAM relief would have
a circumscribed set of transactions
available to them, or their transactions
could be more expensive because of the
preference that counterparties have for
transacting business with QPAMs.
9. In its request for modifications to
its existing exemption, UBS states that
the requested modifications will help
ensure that the QPAMs continue to
operate without disruption to their plan
clients, which in turn is necessary for
UBS and CSAM to successfully
complete the Merger.
Written Comments
In the proposed exemption, 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 by May 18, 2023. The
Department received one written
comment from the Applicants and no
requests for a public hearing.
I. Comments From the Applicants
Comment 1: Modify the Existing UBS
AG and CSAM Exemptions
In their comment letter, the
Applicants state that the modifications
to the separate existing exemptions for
UBS and Credit Suisse that the banks
requested in their application are
sufficiently protective of affected
4 CSAM submitted these representations to the
Department on March 16, 2023, in connection with
an exemption application submitted by CSAM (the
CSAM Application), for the CS Affiliated and
Related QPAMs to continue to rely upon PTE 84–
14 beyond the one-year term of their current
individual exemption (PTE 2022–01), which
expires on the earlier of July 21, 2023, or the closing
date of the Merger. The CSAM Application was
submitted to the Department before the Merger was
announced. The Department closed the CSAM
Application upon receipt of the CSAM and UBS
modification request discussed herein. The CSAM
Application and supporting documents are
available to the public through EBSA’s Public
Disclosure Office, by referencing D–12089.
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Covered Plans and are carefully tailored
to the circumstances presented. They
assert that:
• A new, unified exemption with the
additional terms proposed by the
Department is not necessary;
• Modifying the existing exemptions
would better account for the time
needed to integrate two large financial
institutions, and the imposition of new
and expanded conditions—some of
which are vaguely worded—
immediately upon the Merger is
unnecessarily punitive and
burdensome; and
• The past misconduct of certain
Credit Suisse affiliates does not mean
additional conditions are required for
the UBS QPAMs (and vice versa).
Department’s Response: The
Department declines to make the
Applicants’ requested change to the
proposal. The consolidated exemption
proposed by the Department contains
important conditions that were not
included in the previous exemptions
that separately cover UBS and Credit
Suisse QPAMs. Importantly, this
exemption requires cross-institutional
accountability. In this regard, no
individuals who participated in or
profited from the criminal misconduct
underlying any of the five Convictions
will be employed by any QPAM in the
post-merger consolidated entity. This
exemption also adds the Merger Report
requirement. These added protections
are essential to protect Covered Plans
considering the uncertainties
surrounding the Merger due to the lack
of information the Applicants submitted
to the Department regarding the Merger.
Comment 2: Extend the Exemption
Period To Align With UBS’s Current
Exemption
The Applicants state that the
Department should not shorten the UBS
exemption period but rather extend the
exemption period for CSAM and its
current and future asset management
affiliates (which expires on July 21,
2023) to align it with the expiration of
UBS’s current exemption in February
2025. Alternatively, if the Department is
unwilling to extend the exemption
period for CSAM to more than a year
after the Merger closing dates, at a
minimum the Department should leave
in place the current duration of UBS’s
existing exemption. The Applicants’
rationale is that:
• UBS did not seek out a merger with
Credit Suisse; UBS was asked to buy
Credit Suisse by the Swiss government
to avoid a global financial crisis that
would result if Credit Suisse failed;
• Shortening the exemption period
does not provide any additional
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protection to plan clients, participants,
and beneficiaries. If anything, the
Department’s proposed reduction in
UBS’s exemption period and certain
other statements in the Department’s
proposal unjustifiably and
unnecessarily inject uncertainty
regarding the longer-term viability of an
important business line to UBS, which
undermines the purpose of UBS’s rescue
of Credit Suisse;
• Most of the ‘‘underlying conduct’’
at issue was committed a number of
years ago by non-QPAM entities, and it
involved personnel who no longer are at
UBS or Credit Suisse. Further, one of
the convictions in issue will fall outside
the QPAM disqualification period
during the one-year exemption period
the Department has proposed, and
another a few months later; and
• The primary regulators of UBS and
Credit Suisse have determined that the
merger is in the interest of banking
customers and clients and of the
financial services industry.
Department’s Response: The
Department declines to extend the term
of this exemption. As stated above, to
date, the Department has received very
limited information from the Applicants
regarding the Merger. Further, the
proposed exemption had only a six-day
comment period. If UBS believes that
additional exemptive relief is
warranted, it should submit an
additional application, which would
allow the Department to develop a more
complete administrative record,
including through a longer comment
period.
Comment 3: Merger Report
The Applicants state that UBS should
not be required to submit a Merger
Report to the Department every 120
days; nor should UBS be required to
provide that report to Covered Plan
fiduciaries. The Applicants state that
the addition of multiple reports is
burdensome, unrelated to the protection
of plans, and would unnecessarily
distract UBS from the operation of its
own business lines and the task of
evaluating and integrating Credit
Suisse’s businesses. In particular, the
Applicants ask the Department to
remove the requirement that, in the
Merger Report, UBS provide ‘‘detailed
information regarding the costs to
ERISA-covered Plans and IRAs . . . that
would arise if this one-year exemption
is not renewed.’’ The Applicants view
this information as the most
burdensome part of an application to
prepare and state that requiring it
several times within one year is
unnecessarily burdensome. They
maintain that these additional periodic
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reports also risk confusing and
distracting plan clients. UBS already
would be required to send two notices
to plan clients under the Department’s
proposal.5
Alternatively, if the Department
retains the requirement for this new
report, the Applicants request that they
should be required to provide the
Merger Report only once, halfway
through the exemption period. For
example, if the exemption period
remains one year, the Applicants would
send the report within 180 days after the
exemption’s effective date.
Department’s Response: The
Department declines to make the
Applicants’ requested changes, in part.
First, the Department declines to
remove the Merger Report requirement.
The Department views the Merger
Report as an essential component of this
exemption due to the fact that the
Applicants submitted almost no detail
regarding the specifics of how Credit
Suisse will be integrated into UBS postmerger. Thus, the Merger Report is an
important supplement to the record and
will inform the Department regarding
post-merger integration developments
that potentially impact Covered Plans.
However, the Department agrees that
the first Merger Report required under
this exemption should be due within six
months after the exemption’s effective
date. A second Merger Report will be
due 12 months after the exemption’s
effective date. While the Department
agrees that the Merger Report does not
need to include ‘‘detailed information
regarding the costs to ERISA-covered
Plans and IRAs that would arise if this
one-year exemption is not renewed,’’
this information must be included in
any future request by UBS to extend this
exemption and will be part of the record
attributable to that exemption request.
The Department also notes that the
Board of Governors of the Federal
Reserve will require UBS Group AG to
submit an Implementation Plan within
three months of the closing of the
Merger. The Department believes that
there will be at least some content
overlap between the Implementation
Report and the Merger Report and that
some of the information prepared for
inclusion in the Implementation Report
can be also used in the Merger Report.
Comment 4: Best Knowledge
The Applicants request the removal of
the proposed new definition of ‘‘best
5 UBS is required to send two notices to Covered
Plans: (1) a notice of its obligations under Section
III(k)(7); and (2) a copy of the exemption along with
a summary under Section III(l). The Merger Report
would represent the third notice that UBS is
required to send to Covered Plans.
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36339
knowledge,’’ ‘‘to the best of one’s
knowledge,’’ ‘‘best knowledge at that
time,’’ in Section I(i) of the proposed
exemption. The Applicants state that
such terms are defined to include
matters that are known to the applicable
individual or should be known to such
individual upon the exercise of such
individual’s due diligence required
under the circumstances, and, with
respect to an entity other than a natural
person, such term includes matters that
are known to the directors and officers
of the entity or should be known to such
individuals upon the exercise of such
individuals’ due diligence required
under the circumstances.
The Applicants state that Credit
Suisse’s current exemption does not
define the term ‘‘best knowledge’’ while
UBS’s current exemption does not even
have a ‘‘best knowledge’’ requirement.
The Applicant submits that the new
definition converts an actual knowledge
standard into a ‘‘seeming negligence’’
standard, introducing unnecessary
uncertainty into the standards for
compliance with the exemption.
Department’s Response: The
Department declines to make the
requested change.6 The Department
notes that the current exemptions relied
on by UBS and Credit Suisse-related
QPAMs fail to describe the ‘‘best
knowledge’’ standard. The inclusion of
language defining ‘‘best knowledge’’
adds clarity and consistency and
removes the uncertainty surrounding
what knowledge is expected from the
entity or an individual.
Comment 5: Material Changes
The Applicants request the
Department to delete footnote 2 from the
proposed exemption, which states that
the exemption would ‘‘cease to apply’’
‘‘if there is any material change in a
transaction covered by the exemption,
or in a material fact or representation
that is part of the record attributable to
D–12089.7 The Applicants maintain that
the plain language of the reference in
the footnote to ‘‘a transaction covered by
the exemption’’ would suggest that a
change in a transaction that relies on
PTE 84–14 would render PTE 84–14
unavailable. The Applicants presume
that this is not the Department’s
intended meaning, since a loan relying
on a QPAM exemption, for example,
6 Contrary to UBS’s assertion, both the previous
UBS and Credit Suisse exemptions contain the
‘‘best knowledge’’ requirement in certain
conditions. In its comment on [the proposed
version of?] PTE 2017–07, UBS requested the
addition of ‘‘best knowledge’’ language in certain
conditions of that exemption.
7 See 88 FR at 30786.
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may be revised at any time in the best
interest of plans.
Department’s Response: The
Department is revising footnote 2, so
that that the referenced language refers
to a material change in the Merger or to
the record attributable to D–12089, and
not to a transaction that relies on PTE
84–14.
Comment 6: Finalize and Publish the
Exemption by May 24, 2023
The Applicants request that
exemptive relief be in place by May 24,
2023 to ensure that there is time for
other required disclosures in advance of
the anticipated May 31, 2023 closing.
Department’s Response: The
Department was unable to publish this
final exemption by May 24, 2023, due
to the short amount of time between the
Merger’s announcement and planned
closing date and the Applicants’
submission of their application on April
17, 2023.
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Comment 7: Audit Periods Pre-Dating
the Merger
The Applicants request clarification
that audit reports for time periods
preceding the Merger are governed by
the UBS and Credit Suisse exemptions
currently in effect prior to the Merger.
Department’s Response: The
Department confirms that audit reports
for time periods before the Merger
closing date (and the effective date of
this exemption) are governed by the
UBS and Credit Suisse exemptions that
are were in effect during those time
periods (and that precede the effective
date of this exemption).
Comment 8: Audit Report Review
The Applicants request a revision to
Section III(j)(8) of the proposed
exemption, which would require the
audit report for each UBS QPAM to be
(1) provided to the Risk Committee of
UBS Group AG, not the Risk Committee
of UBS AG, and (2) reviewed and
certified by a senior executive officer of
UBS Group AG. The Applicants state
that it would be more protective and
consistent with UBS’s current practice
for the audit report to be provided to the
Risk Committee of UBS Group AG,
which is the parent of UBS AG.
Department’s Response: The
Department agrees with the Applicants’
requested revision and has modified
Section III(j)(8) accordingly.
Comment 9: Audit Report Review
Sections III(i) and III(j) of the
proposed exemption imposes separate
audit report requirements for the CS
Affiliated QPAMs and the UBS
Affiliated QPAMs, respectively. This
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means that the CS QPAMs and UBS
QPAMs need to continue to undergo
separate audits during the term of this
exemption. Further, proposed
subsections III(i)(8) and III(j)(8) require
(a) CSAG’s Board of Directors and a
Credit Suisse officer to review and
certify the CS Affiliated QPAM audits,
and (b) UBS’s Board and a UBS officer
review and to certify the UBS Affiliated
QPAM audits.
The Applicants submit that aligning
the recipients of the audit reports would
simplify compliance and request that
both the CS Affiliated QPAM audits and
the UBS Affiliated QPAM audits be
submitted to and certified by UBS’s
Board and a UBS officer.
Department’s Response: The
Department agrees with the Applicants
and has revised Section III(i)(8)
accordingly to align with Section
III(j)(8).
Comment 10: Recipients of Notice
Section III(l) of the proposed
exemption requires the Affiliated
QPAMs to provide notice of the
proposed and final exemption as
published in the Federal Register, along
with a summary describing the facts that
led to the Convictions and a
prominently displayed statement that
the Convictions result in a failure to
meet a condition in PTE 84–14 to ‘‘each
sponsor and beneficial owner of a
Covered Plan,’’ and ‘‘the sponsor of an
investment fund in any case where an
Affiliated QPAM acts as a sub-adviser to
the investment fund in which such
ERISA-covered plan and IRA invests.’’
The Applicants request that the
Department revise Section III(l) so that
the Affiliated QPAMs do not have to
send these notices to ERISA-covered
Plans and IRAs for whom UBS neither
relies on the QPAM exemption nor has
represented to clients that it is relying
on the QPAM exemption. The
Applicants submit that requiring notice
to be provided to ‘‘the sponsor of an
investment fund in any case where an
Affiliated QPAM acts as a sub-adviser to
the investment fund in which such
ERISA-covered plan and IRA invests’’
could be interpreted as requiring the
Affiliated QPAMs to provide notice to
all ERISA-covered plans and IRAs,
rather than only to plans for which UBS
relies on the QPAM exemption or has
represented that it is relying on the
QPAM exemption.
Department’s Response: The
Department disagrees with the
Applicants’ concerns with the notice
requirement. However, the Department
has revised proposed condition (III)(l) to
expressly require UBS to only to send
the required notices to Covered Plans
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and not to accounts for which UBS
neither relies on the QPAM exemption
nor has represented that it is relying on
the QPAM exemption.
Comment 11: Exemption Report
Recipients
The Applicants request the
Department to revise proposed Section
III(n)(2)(iv) to clarify that the Exemption
Report required by the exemption only
must be provided to officers of either
CSAG or UBS AG, but not both.
Department’s Response: The
Department declines to make the
Applicants’ requested change. Crossinstitutional accountability is an
important aspect of this exemption
given the uncertainty surrounding the
Merger. Section III(n)(2)(iv) requires the
Exemption Report to be provided to the
appropriate officers of CSAM or UBS
AG, and the Department believes this is
a minimal burden that adds protection
for Covered Plans.
Comment 12: Imposing Internal
Procedures
Section (o) of the proposed exemption
states: ‘‘UBS Group AG imposes its
internal procedures, controls, and
protocols on each Misconduct Entity to
reduce the likelihood of any recurrence
of conduct that is the subject of the
Convictions.’’ The Applicants request
the Department to revise Section III(o) to
refer to UBS Group AG instead of UBS
AG because the Credit Suisse QPAMs
might not report to UBS AG after the
Merger.
Department’s Response: The
Department agrees with the Applicants’
requested change and has modified
Section III(o) accordingly.
Comment 13: Deferred Prosecution
Agreements (DPAs) or Non-Prosecution
Agreements (NPAs)
The Applicants request that the
Department revise Section III(r) to
clarify that UBS only needs to disclose
a DPA or NPA that is entered into
during the exemption period, to avoid
any suggestion that UBS must redisclose
pre-existing DPAs or NPAs.
Department’s Response: The
Department agrees with the Applicants’
requested revision and confirms that
UBS does not need to redisclose preexisting DPAs or NPAs, provided that
such pre-existing DPAs or NPAs were
previously disclosed to the Department.
However, the Department notes that all
such pre-existing DPAs and NPAs must
be included as part of any request by
UBS to extend this exemption.
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Comment 14: Alternative Non-QPAMBased Exemption
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The Applicants state that the
Department should not proceed with an
alternative, non-QPAM-based
individual exemption. The Department
invited comments on whether to
‘‘develop[ ] an individual exemption on
its own motion that would protect
affected Covered Plans by permitting
some, but not all, of the transactions
covered by PTE 84–14.’’ The
Department stated that, if it ‘‘took that
approach, the UBS/CSAG affiliated
entities would no longer rely on or
reference PTE 84–14 for relief, but
rather would rely on the new individual
exemption for any relief, which would
not be based on their status as QPAMs
status under PTE 84–14.’’ The
Applicants oppose such an alternative.
They maintain that the current QPAMs
have existing contracts that expressly
rely on the QPAM exemption or
represent that the asset manager is a
QPAM, and state that those contracts do
not account for an alternative such as
the Department describes. Moreover, the
Applicants assert that the QPAM
exemption is widely accepted and
understood by sophisticated clients; it
cannot suddenly be replaced, and
withdrawing its availability from a
particular asset manager would put that
firm at a competitive disadvantage.
Applicants claim that this is directly
contrary to the purposes of financial
strength and stability that regulators
intended to be achieved by UBS-Credit
Suisse merger. Applicants state that if
the Department is interested in creating
an alternative to the QPAM exemption,
it should make the alternative available
to all asset managers concurrently with
the QPAM exemption, so that the
alternative can gain broad market
adoption and any such alternative
would need to be clearly delineated and
published for notice and comment.
Department’s Response: The
Department appreciates the Applicants’
response to the request for information
on the idea of a non-QPAM-linked
exemption and will take the response
into account in any future
considerations on this issue. Any
decision to develop a non-QPAM-linked
individual exemption will be subject to
a full notice and comment period.
Comment 15: Miscellaneous Other
Requested Revisions From the
Applicants
Applicants also requested several
other miscellaneous revisions to the
proposed exemptions, as follows:
A. Remove references to Credit Suisse
Asset Management Limited because it is
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no longer acting as a QPAM.
Specifically, strike Section I(a)(3), and
remove references to Credit Suisse Asset
Management Limited from Sections
I(a)(4) and I(b)(1).
B. Revise Section I(c)(2) which read,
‘‘(2) the judgment of conviction against
CSSEL in Case Number 1:21–cr–00520–
WFK (the ‘‘CSSEL Conviction’’);’’ to
more fully describe the conviction as:
‘‘(2) the judgment of conviction against
CSSEL for one count of conspiracy to
commit wire fraud (18 U.S.C. 1349) that
was entered in the District Court for the
Eastern District of New York on July 22,
2022, in Case Number 1:21–cr–00520–
WFK (the ‘CSSEL Conviction’).’’
C. Revise Section I(c)(5) to include the
italicized regarding the appellate court
decision upholding the conviction: ‘‘the
judgment of conviction on February 20,
2019, against UBS and UBS France in
case Number 1105592033 in the French
First Instance Court and a decision
upholding the February 20, 2019
judgment of the French First Instance
Court (the ‘2019 French Conviction’).’’
D. Correct the presiding judge’s
initials in the case number in Sections
I(c)(4), I(f), and III(a)(i) to: ‘‘3:15–cr–
00076–SRU.’’
E. In Section I(e), correctly identify
UBS and Credit Suisse entities that are
engaging in the upcoming merger
transaction, as follows: ‘‘The term
‘Exemption Period’ means the one-year
period that begins on the closing date of
the acquisition of CSG by UBS Group
AG (hereinafter, the Merger).’’
F. In Section I(h), revise ‘‘CS’’ to
‘‘CSAG.’’
Department’s Response: The
Department accepts the Applicants’
requested revisions and has made the
corresponding changes.
Publicly Available Information
The complete application file (D–
12089) is available for public inspection
in the Public Disclosure Room of the
Employee Benefits Security
Administration, Room N–1515, U.S.
Department of Labor, 200 Constitution
Avenue NW, Washington, DC 20210.
For a more complete statement of the
facts and representations supporting the
Department’s decision to grant this
exemption, please refer to the notice of
proposed exemption published on May
12, 2023, at 88 FR 30785.
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) does not relieve a
fiduciary or other party in interest from
certain requirements of other ERISA
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36341
provisions, including but not limited to
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 their duties respecting the
plan solely in the interest of the plan’s
participants and beneficiaries and in a
prudent fashion in accordance with
ERISA Section 404(a)(1)(B).
(2) As required by ERISA Section
408(a), the Department hereby finds that
the exemption is: (a) administratively
feasible; (b) in the interests of Covered
Plans and their participants and
beneficiaries; and (c) protective of the
rights of the Covered Plan’s participants
and beneficiaries.
(3) This exemption is supplemental
to, and not in derogation of, any other
ERISA provisions, 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 for determining whether
the transaction is in fact a prohibited
transaction.
(4) The availability of this exemption
is subject to the express condition that
the material facts and representations
contained in the application accurately
describe all material terms of the
transactions that are the subject of the
exemption and are true at all times.
Accordingly, after considering the
entire record developed in connection
with the Applicants’ exemption
application, the Department has
determined to grant the following
exemption under the authority of ERISA
Section 408(a) in accordance with the
Department’s exemption procedures set
forth in 29 CFR part 2570, subpart B: 8
Exemption
Section I. Definitions
(a) Names of Certain Corporate
Entities:
(1) The term ‘‘CSG’’ means Credit
Suisse Group AG, a publicly traded
corporation organized under the laws of
Switzerland.
(2) The term ‘‘CSAG’’ means Credit
Suisse AG and is 100% owned by CSG.
(3) The term ‘‘CSSAM LLC’’ or CSAM
means Credit Suisse Asset Management,
LLC which is a Credit Suisse asset
management affiliate.
(4) The term ‘‘CSSEL’’ means Credit
Suisse Securities (Europe) Limited and
is headquartered in London, United
Kingdom and indirectly a wholly owned
subsidiary of CSG.
8 76
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FR 66637, 66644 (October 27, 2011).
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(5) The term ‘‘UBS’’ means UBS AG,
a publicly traded corporation organized
under the laws of Switzerland.
(6) The term ‘‘UBS Americas’’ means
UBS Asset Management (Americas) Inc.
and is one of the four UBS affiliates and
is wholly owned by UBS Americas, Inc.,
a wholly owned subsidiary of UBS AG.
(7) The term ‘‘UBS France’’ means
UBS (France) S.A. and is a wholly
owned subsidiary of UBS incorporated
under the laws of France.
(8) The term ‘‘UBS Hedge Fund
Solutions LLC’’ was formerly known as
UBS Alternative and Quantitative
Investments, LLC is one of four UBS
affiliates and is wholly owned by UBS
Americas Holding LLC, a wholly owned
subsidiary of UBS AG.
(9) The term ‘‘UBS O’Connor LLC’’ is
one of four UBS affiliates and is wholly
owned by UBS Americas Holding LLC,
a wholly owned subsidiary of UBS AG.
(10) The term ‘‘UBS Realty Investors
LLC’’ is one of the four UBS affiliates
and is wholly owned by UBS Americas,
Inc., a wholly owned subsidiary of UBS
AG.
(11) The term ‘‘UBS Securities Japan’’
means UBS Securities Japan Co. Ltd, a
wholly owned subsidiary of UBS
incorporated under the laws of Japan.
(b) The term ‘‘Affiliated QPAM’’
means (1) the ‘‘CS Affiliated QPAM,’’
which is Credit Suisse Asset
Management, LLC (‘‘CSAM LLC’’); and
(2) the ‘‘UBS QPAMs,’’ which are UBS
Asset Management (Americas) Inc., UBS
Realty Investors LLC, UBS Hedge Fund
Solutions LLC, UBS O’Connor LLC, and
any future entity within the Asset
Management or the Global Wealth
Management Americas U.S. divisions of
UBS that qualifies as a ‘‘qualified
professional asset manager’’ (as defined
in Section VI(a) of PTE 84–14) and that
relies on the relief provided by PTE 84–
14, and with respect to which UBS is an
‘‘affiliate’’ (as defined in Part VI(d) of
PTE 84–14). The term Affiliated QPAM
excludes a Misconduct Entity.
(c) 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’’); (2) the judgment of
conviction against CSSEL for one count
of conspiracy to commit wire fraud (18
U.S.C. 1349) that was entered in the
District Court for the Eastern District of
New York on July 22, 2022, in Case
Number 1:21–cr–00520–WFK (the
‘‘CSSEL Conviction’’); (3) the judgment
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of conviction against UBS Securities
Japan Co. Ltd. in case number 3:12–cr–
00268–RNC in the U.S. District Court for
the District of Connecticut for one count
of wire fraud in violation of Title 18,
United States Code, sections 1343 and 2
in connection with submission of YEN
London Interbank Offered Rates and
other benchmark interest rates; (4) the
judgment of conviction against UBS in
case number 3:15–cr–00076–SRU in the
U.S. District Court for the District of
Connecticut for one count of wire fraud
in violation of Title 18, United States
Code, Sections 1343 and 2 in
connection with UBS’s submission of
Yen London Interbank Offered Rates
and other benchmark interest rates
between 2001 and 2010; and (5) the
judgment of conviction on February 20,
2019, against UBS and UBS France in
case Number 1105592033 in the French
First Instance Court and a decision
upholding the February 20, 2019
judgment of the French First Instance
Court (the 2019 French Conviction).
(d) 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 an Affiliated QPAM relies on
PTE 84–14, or with respect to which an
Affiliated QPAM (or any CSAG or UBS
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 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,
an 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 Affiliated QPAM will not
represent that it is a QPAM, and will not
rely on the relief described in PTE 84–
14.
(e) The term ‘‘Exemption Period’’
means the one-year period that begins
on the closing date of the acquisition of
CSG by UBS Group AG (hereinafter, the
Merger).
(f) The term ‘‘FX Misconduct’’ means
the conduct engaged in by UBS
personnel described in Exhibit 1 of the
Plea Agreement (Factual Basis for
Breach) entered into between UBS and
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the Department of Justice Criminal
Division, on May 20, 2015, in
connection with Case Number 3:15–cr–
00076–SRU filed in the US District
Court for the District of Connecticut.
(g) The term ‘‘Misconduct Entity’’
means an entity subject to one of the
Convictions described above, i.e., UBS,
UBS Securities Japan, UBS France,
CSAG and CSSEL.
(h) The term ‘‘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
UBS owns a direct or indirect five (5)
percent or more interest, but with
respect to which a Misconduct Entity is
not an ‘‘affiliate’’ (as defined in section
VI(d)(1) of PTE 84–14). The term
‘‘Related QPAM’’ excludes a
Misconduct Entity.
(i) The term ‘‘best knowledge,’’ ‘‘to the
best of one’s knowledge,’’ ‘‘best
knowledge at that time,’’ and other
similar ‘‘best knowledge’’ terms shall
include matters that are known to the
applicable individual or should be
known to such individual upon the
exercise of such individual’s due
diligence required under the
circumstances, and, with respect to an
entity other than a natural person, such
term includes matters that are known to
the directors and officers of the entity or
should be known to such individuals
upon the exercise of such individuals’
due diligence required under the
circumstances.
Section II. Covered Transactions
Under this exemption, the Affiliated
QPAMs and the Related QPAMs would
not be precluded from relying on the
exemptive relief provided by Prohibited
Transaction Class Exemption 84–14
(PTE 84–14) 9 during the Exemption
Period, notwithstanding the
‘‘Convictions,’’ provided that the
definitions in Section I and the
conditions in Section III are satisfied.
Section III. Conditions
(a) The Affiliated QPAMs and the
Related QPAMs (including their
officers, directors, agents other than the
Misconduct Entities, employees of such
QPAMs, and employees of Misconduct
Entities that do work for 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 conduct
underlying the Convictions and the FX
9 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).
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Misconduct. Further, any other party
engaged on behalf of the Affiliated
QPAMs and the 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
underlying the Convictions described in
Section I(c)(1) and (2) and the 2019
French Conviction.
For all purposes of this exemption,
the ‘‘conduct’’ of any person or entity
that is the ‘‘subject of the Convictions’’
encompasses any misconduct of CSAG,
CSSEL, UBS, UBS France, UBS
Securities Japan, and/or their personnel:
(i) that is described in Exhibit 3 to the
Plea Agreement entered into between
UBS and the Department of Justice
Criminal Division, on May 20, 2015, in
connection with case number 3:15–cr–
00076–SRU; (ii) that is described in
Exhibits 3 and 4 to the Plea Agreement
entered into between UBS Securities
Japan and the Department of Justice
Criminal Division, on December 19,
2012, in connection with case number
3:12–cr–00268–RNC; (iii) that is the
basis of the 2019 French Conviction;
and (iv) that is the subject of the CSAG
and CSSEL convictions described in
Section I(c)(1) and (c)(2); and for
purposes of the exemption as well as the
avoidance of doubt, the term
‘‘participate in’’ (as included paragraph
(c) below), refers not only to active
participation in the criminal conduct
but includes an individual or entity’s
knowledge or approval of the criminal
conduct, without taking active steps to
prohibit such conduct, such as reporting
the conduct to the individual’s
supervisors, and to the Board of
Directors.
(b) The Affiliated QPAMs and the
Related QPAMs (including their
officers, directors, agents other than the
Misconduct Entities, 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 and the UBS FX
Misconduct. Further, any other party
engaged on behalf of the Affiliated
QPAMs and the 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 Convictions;
(c) The Affiliated QPAMs do not
currently and will not in the future
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employ or knowingly engage any of the
individuals who participated in the
criminal conduct underlying the
Convictions;
(d) At all times during the Exemption
Period, no 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 Affiliated QPAM with
respect to one or more Covered Plans, to
enter into any transaction with a
Misconduct Entity or to engage a
Misconduct Entity 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. An Affiliated
QPAM will not fail this condition solely
because:
(1) A CSAG (or successor) affiliate
serves as a local sub-custodian that is
selected by an unaffiliated global
custodian that, in turn, is selected by
someone other than an Affiliated QPAM
or Related QPAM;
(2) CSAG (or a successor) provides
only necessary, non-investment related,
non-fiduciary services that support the
operations of an Affiliated QPAM, at an
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
(or a successor) to provide any service
to an investment fund managed by an
Affiliated QPAM or Related QPAM; or
(3) CSAG (or successor) employees are
double-hatted, seconded, supervised, or
subject to the control of an Affiliated
QPAM;
(e) Any failure of an Affiliated QPAM
to satisfy Section I(g) of PTE 84–14 arose
solely from the Convictions;
(f) An Affiliated QPAM or a 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 underlying the Convictions; or
cause the Affiliated QPAM or Related
QPAM or its affiliates to directly or
indirectly profit from the criminal
conduct underlying the Convictions;
(g) No Misconduct Entity 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
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36343
employees or employees of an affiliate;
or (2) in connection with securities
lending services of the New York
Branch of CSAG. No Misconduct Entity
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 Affiliated QPAM must
maintain, adjust (to the extent
necessary), implement, and follow the
written policies and procedures
described below (Policies).10 The
Policies must require and be reasonably
designed to ensure that:
(i) The asset management decisions of
the QPAM are conducted independently
of the corporate and management and
business activities of each Misconduct
Entity, and without considering any fee
a related local sub-custodian may
receive from those decisions. This
condition does not preclude an
Affiliated QPAM, as defined in Section
I(b)(1), from receiving publicly available
research and other widely available
information from a CSAM affiliate, other
than CSSEL, or from a UBS affiliate;
(ii) The 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 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 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 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 QPAM complies with the
terms of this one-year exemption, and
10 This exemption does not preclude the UBS
QPAMs and CS Affiliated QPAM from maintaining
separate Policies provided that the Policies comply
with this exemption.
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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 QPAM that
engaged in the violation or failure, and
the independent auditor responsible for
reviewing compliance with the Policies.
A QPAM will not be treated as having
failed to develop, implement, maintain,
or follow the Policies, if it corrects any
instance of noncompliance as soon as
reasonably possible upon discovery, or
as soon as reasonably possible after the
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 Affiliated QPAM must
maintain, adjust (to the extent
necessary), and implement or continue
a program of training during the
Exemption Period (the Training) that is
conducted at least annually for all
relevant Affiliated QPAM asset/portfolio
management, trading, legal, compliance,
and internal audit personnel.11 The
Training must:
(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 (as
defined in Section I(b)(1) 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
11 This exemption does not preclude an Affiliated
QPAM from maintaining separate training programs
provided each training program complies with this
exemption.
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evaluate the adequacy of, and each CS
Affiliated QPAM’s compliance with, the
Policies and Training described above
in Section III(h). The audit requirement
must be incorporated in the Policies.
The audit must cover the Exemption
Period and must be completed no later
than 180 days after the Exemption
Period. The prior exemption audits
required pursuant to PTE 2019–07 and
PTE 2022–01 must be completed in
accordance with the audit requirements
of these prior exemptions for the prior
period of November 21, 2021, through
the beginning date of the Exemption
Period of this one-year exemption
within 180 days of the beginning of the
Exemption Period of this one-year
exemption. These prior exemption
audits and coinciding audit reports can
be combined into one audit and report
for the prior exemption audits. The
prior exemption audit report(s) must be
submitted in accordance with section
III(i)(9) below;
(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, CSAM, 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 CSAM 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;
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(5) For each audit, on or before the
end of the relevant period described in
Section III(i)(1) for completing the
audits, the auditor must issue a written
report (the Audit Report) to CSAM 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 before 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(o) below, as the basis for the
auditor’s conclusions in lieu of
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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(n);
(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 or successor 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) The Risk Committee of UBS Group
AG’s Board of Directors is provided a
copy of the Audit Report and a senior
executive officer of UBS Group AG’s
Compliance and Operational Risk
Control function 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. The Audit Report
under this section III(i) must comply
with the delivery and certification
requirements in section III(j)(8) below;
(9) Each CS Affiliated QPAM provides
its certified Audit Report to the
Department by regular mail addressed
to: Office of Exemption Determinations
(OED), 200 Constitution Avenue NW,
Washington, DC 20001, or via email to
e-OED@dol.gov. The delivery must take
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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) CSAM 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 CSAM and/or
the CS Affiliated QPAMs;
(j)(1) Each UBS QPAM (as defined in
Section I(b)(2) submits to an audit
conducted 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 UBS QPAM’s compliance with, the
Policies and Training described above
in Section (h). The audit requirement
must be incorporated in the Policies.
The audit must cover the Exemption
Period and it must be completed no
later than 180 days after the end of the
Exemption Period. The prior exemption
audits required pursuant to PTE 2020–
01 must be completed in accordance
with the audit requirement of PTE
2020–01 for the prior periods of: (1)
March 20, 2022 through March 19, 2023;
and (2) March 20, 2023 through the
beginning date of the Exemption Period
for this one-year exemption, and each
audit must be provided within 180 days
of the beginning of the Exemption
Period. The prior exemption audits and
coinciding audit reports can be
combined into one audit and report for
the prior exemption audits. The prior
exemption audit report(s) must be
submitted in accordance with section
III(j)(9) below;
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36345
(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 attorneyclient privilege, each UBS QPAM and,
if applicable, UBS, 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 UBS 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 UBS QPAM’s operational
compliance with the Policies and
Training. In this regard, the auditor
must test, for each UBS QPAM, a
sample of such UBS QPAM’s
transactions involving Covered Plans,
sufficient in size and nature to afford
the auditor a reasonable basis to
determine such UBS QPAM’s
operational compliance with the
Policies and Training;
(5) For the audit, on or before the end
of the relevant period described in
Section I(k)(1) for completing the audit,
the auditor must issue a written report
(the Audit Report) to UBS and the UBS
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 UBS QPAMs. The Audit Report
must include the auditor’s specific
determinations regarding:
(i) The adequacy of each UBS QPAM’s
Policies and Training; each UBS
QPAM’s compliance with the Policies
and Training; the need, if any, to
strengthen such Policies and Training;
and any instance of the respective UBS
QPAM’s noncompliance with the
written Policies and Training described
in Section III(h) above. The UBS QPAM
must promptly address any
noncompliance. The UBS 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
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recommendations (if any) with respect
to strengthening the Policies and
Training of the respective UBS QPAM.
Any action taken or the plan of action
to be taken by the respective UBS
QPAM must be included in an
addendum to the Audit Report (such
addendum must be completed prior to
the certification described in Section
III(j)(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 UBS 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 UBS QPAM has complied
with the requirements under this
subparagraph must be based on
evidence that each UBS QPAM has
implemented, maintained, and followed
the Policies and Training required by
this exemption. Furthermore, the
auditor must not solely rely on the
Exemption Report created by the
Compliance Officer, as described in
Section I(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(j)(3) and (4) above; and
(ii) The adequacy of the Exemption
Review described in Section III(n);
(6) The auditor must notify the
respective UBS 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
UBS 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, such
UBS 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. Such
certification must also include the
signatory’s determination that, to the
best of such officer’s knowledge at the
time, the Policies and Training in effect
at the time of signing are adequate to
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ensure compliance with the conditions
of this exemption and with the
applicable provisions of ERISA and the
Code;
(8) The Risk Committee of UBS Group
AG’s Board of Directors is provided a
copy of the Audit Report; and a senior
executive officer of UBS Group AG’s
Compliance and Operational Risk
Control function must review the Audit
Report for each UBS QPAM and must
certify in writing, under penalty of
perjury, that such officer has reviewed
the Audit Report;
(9) Each UBS QPAM provides its
certified Audit Report, by regular mail
to: Office of Exemption Determinations
(OED), 200 Constitution Avenue NW,
Washington, DC 20001; or via email to
e-OED@dol.gov. This delivery must take
place no later than 45 days following
completion of the Audit Report. The
Audit Reports will be made part of the
public record regarding this one-year
exemption. Furthermore, each UBS
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 that is entered into
subsequent to the effective date of this
exemption must be submitted to OED no
later than two 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 and inspection is otherwise
permitted by law; and
(12) UBS must notify the Department
of a change in the independent auditor
no later than two 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 between the
terminated auditor and UBS;
(k) As of the effective date of this oneyear exemption, with respect to any
arrangement, agreement, or contract
between an Affiliated QPAM and a
Covered Plan, the 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
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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 the 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 the QPAM; or any claim arising out
of the failure of such 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 a
Conviction covered under this
exemption. This condition applies only
to actual losses caused by the QPAM’s
violations. The term Actual Losses
includes, but is not limited to, losses
and related costs arising from
unwinding transactions with third
parties and from transitioning Plan
assets to an alternative asset manager as
well as costs associated with any
exposure to excise taxes under Code
section 4975 as a result of a QPAM’s
inability to rely upon the relief in the
QPAM Exemption;
(3) Not to require (or otherwise cause)
the Covered Plan to waive, limit, or
qualify the liability of the 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 QPAM,
with respect to any investment in a
separately-managed account or pooled
fund subject to ERISA and managed by
such 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-
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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 QPAM 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 UBS (and affiliates) or CSAM (and
affiliates), or damages arising from acts
outside the control of the Affiliated
QPAM; and
(7) Within 120 days after the effective
date of this one-year exemption, each
QPAM must provide a notice of its
obligations under this Section III(k) to
each Covered Plan. For prospective
Covered Plans that enter into a written
asset or investment management
agreement with a QPAM on or after a
date that is 120 days after the effective
date of this exemption, the QPAM must
agree to its obligations under this
Section III(k) in an updated investment
management agreement between the
QPAM and such clients or other written
contractual agreement. Notwithstanding
the above, a 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 QPAM may provide the
new Covered Plan with amendments
that need not be signed with any
documents required by this subsection
(k) within ten (10) business days after
receipt of the signed agreement.
(l) Within 60 days after the effective
date of this one-year exemption, each
Affiliated QPAM provides notice of the
proposed and final 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, to each
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sponsor and beneficial owner of a
Covered Plan that has entered into a
written asset or investment management
agreement with an Affiliated QPAM, or
the sponsor of an investment fund in
any case where an 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 an Affiliated QPAM
after a date that is 60 days after the
effective date of this 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
or the UBS Affiliated QPAM. The
notices may be delivered electronically
(including by an email that has a link to
the one-year exemption). An Affiliated
QPAM does not need to send the
required notices to plans for which an
Affiliated QPAM neither relies on
QPAM nor has represented that it is
relying on QPAM.
(m) The Affiliated QPAMs 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 CSAM or
UBS 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;
(n)(1) Within 60 days after the
effective date of this exemption, each
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 (n), each
relevant line of business within a CS
Affiliated QPAM or UBS Affiliated
QPAM may designate its own
Compliance Officer(s). Notwithstanding
the above, the appointed Compliance
Officer may not be a person who: (i)
participated in the criminal conduct
underlying the Convictions, or knew of,
or (ii) had reason to know of, the
criminal conduct without taking 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
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36347
the Policies and Training.12 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 highestranking corporate officer in charge of
compliance for the applicable 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 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 time period; the
most recent Audit Report issued
pursuant to this exemption or PTE
2020–01 or PTE 2022–01; any material
change in the relevant business
activities of the 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 Affiliated QPAMs;
(ii) The Compliance Officer prepares
a written report for the Exemption
Review (an Exemption Report) that (A)
summarizes their 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
12 Pursuant to PTE 2020–01 and PTE 2022–01 the
Compliance Officer must conduct an exemption
review (annual review) for each period
corresponding to the audit periods set forth in those
exemptions and the Compliance officer’s written
report submitted to the Department within three (3)
months of the end of the period to which it relates.
Accordingly, the final exemption review pursuant
to PTE 2020–01 must cover the period March 19,
2022 through the beginning date of the Exemption
Period of this one-year exemption and must be
completed within three (3) months from the end of
the period to which it relates. Also, the final
exemption review pursuant to PTE 2022–01 must
cover the period November 21, 2022 through the
beginning date of the Exemption Period of this oneyear exemption and must be completed within
three (3) months from the end of the period to
which it relates.
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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 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 CSAM and UBS and to each
Affiliated QPAM to which such report
relates, and to the head of compliance
and the general counsel (or their
functional equivalent) of CSAM, UBS,
the relevant Affiliated QPAM. The
Exemption 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 Exemption Period, and 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;
(o) UBS Group AG imposes its
internal procedures, controls, and
protocols on each Misconduct Entity to
reduce the likelihood of any recurrence
of conduct that is the subject of the
Convictions;
(p) 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
UBS or CSAM or an affiliate of either
failed to comply in all material respects
with any requirement imposed by such
regulatory authority in connection with
the Convictions;
(q) Each 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 Affiliated
QPAM relies upon the relief in this
exemption;
(r) During the Exemption Period, UBS
must: (1) immediately disclose to the
Department any Deferred Prosecution
Agreement (a DPA) or Non-Prosecution
VerDate Sep<11>2014
17:34 Jun 01, 2023
Jkt 259001
Agreement (an NPA) with the U.S.
Department of Justice, entered into by
UBS or CSAM or any of their affiliates
(as defined in Section VI(d) of PTE 84–
14) during the Exemption Period 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 during the
Exemption period, as permitted by law,
regarding the agreement and/or conduct
and allegations that led to the
agreement. UBS does not need to
redisclose pre-existing DPAs or NPAs,
provided that such pre-existing DPAs or
NPAs were previously disclosed to the
Department. However, the Department
notes that all such pre-existing DPAs
and NPAs must be included as part of
any request by UBS to extend this
exemption;
(s) Within 60 days after the effective
date of this exemption, each 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 of the
Policies (Summary Policies) that
accurately summarizes key components
of the 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.13 With respect to this
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;
(t) An Affiliated QPAM will not fail
to meet the terms of this one-year
exemption solely because a different
Affiliated QPAM fails to satisfy a
condition for relief described in Section
III(c), (d), (h), (i), (j), (k), (l), (m), (s) or
(u); or if the independent auditor
described in Section III(i) or (j) fails to
comply with a provision of the
exemption other than the requirement
described in Section III(i)(11) and
(j)(11), provided that such failure did
not result from any actions or inactions
of CSAM or UBS or its affiliates;
(u) All the material facts and
representations set forth in the
13 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.
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
Summary of Facts and Representations
are true and accurate; and
(v) Every six months following the
merger of UBS and CSAG, UBS must
submit a written report to the
Department that updates the progress of
the Merger. This report must also be
provided to Covered Plan fiduciaries
(including via an electronic link).
Additionally, in its first report to the
Department, UBS must: (1) identify the
QPAMs using this exemption as the date
of the Report; (2) provide details
regarding the extent to which the CS
Affiliated QPAMs have been integrated
into UBS’s operations and any other
relevant changes with respect to any
QPAMs that are using this exemption;
and (3) any other changes, whether
operational or otherwise, that impact
any requirements under this exemption;
Applicability Date: The exemption
will be in effect for a period of one year
beginning on the closing date of the
Merger.
Signed at Washington, DC, this 31st day of
May 2023.
George Christopher Cosby,
Director, Office of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2023–11864 Filed 6–1–23; 8:45 am]
BILLING CODE 4510–29–P
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
[Document Number NASA–22–060; Docket
Number–NASA–2022–0002]
National Environmental Policy Act;
Mars Sample Return Campaign;
Correction
National Aeronautics and
Space Administration (NASA).
ACTION: Notice; correction.
AGENCY:
NASA published a document
in the Federal Register of May 25, 2023
concerning the availability of the Mars
Sample Return (MSR) Campaign Final
Programmatic Environmental Impact
Statement (PEIS). The document was
published one week early, which
created incorrect information in the
DATES caption.
FOR FURTHER INFORMATION CONTACT: Mr.
Steve Slaten, NASA Jet Propulsion
Laboratory, by electronic mail at Marssample-return-nepa@lists.nasa.gov or by
telephone at 202–358–0016. For
questions regarding viewing the Docket,
please call Docket Operations,
telephone: 202–366–9317 or 202–366–
9826.
SUMMARY:
SUPPLEMENTARY INFORMATION:
E:\FR\FM\02JNN1.SGM
02JNN1
]]>Agencies
[Federal Register Volume 88, Number 106 (Friday, June 2, 2023)]
[Notices]
[Pages 36337-36348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11864]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2023-14; Exemption Application No. D-
12089]
Exemption From Certain Prohibited Transaction Restrictions
Involving UBS AG (UBS) and Credit Suisse Asset Management, LLC (CSAM),
Located in Zurich, Switzerland
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: The Labor Department previously issued several temporary
individual prohibited transaction exemptions (PTEs) that allow certain
Qualified Professional Asset Managers (QPAMs) related to UBS and Credit
Suisse Group AG (CSAG) (the UBS QPAMs, CS Affiliated QPAMs, and the CS
Related QPAMs, as further defined below) to continue to rely on the
exemptive relief provided by Prohibited Transaction Class Exemption
(PTE) 84-14, notwithstanding five judgments of convictions involving
entities within the UBS and CSAG corporate umbrellas, as described
below (the Convictions). The most recent individual exemptions are PTE
2020-01 (for UBS) and PTE 2022-01 (for CSAG). Those individual
exemptions will no longer be available following the upcoming merger
between CSAG and UBS (the Merger), solely as a result of the Merger.
This exemption allows the UBS QPAMs, CS Affiliated QPAMs, and the CS
Related QPAMs to continue to rely on PTE 84-14 as of the closing date
of the Merger, if certain conditions are met. This individual exemption
is necessary to preserve the ability of the QPAMs to engage in the
transactions permitted by PTE 84-14, which would be lost solely due to
the impending merger of UBS and Credit Suisse (and not because of a new
conviction for either UBS or Credit Suisse or their affiliates, or due
to any other disqualifying reason). This exemption will be effective
for one year beginning on the closing date of the Merger. The limited
duration of this exemption reflects the lack of information UBS and
Credit Suisse Asset Management, LLC (CSAM) submitted to the Department
regarding the effects the Merger will have on Covered Plans with assets
managed by the UBS QPAMs and CS Affiliated and Related QPAMs.
DATES: The exemption will be in effect for a period of one year
beginning on the closing date of the Merger.
FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department
at (202) 693-8456. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: On May 12, 2023, the Department published a
notice of proposed exemption in the Federal Register \1\ permitting the
UBS QPAMs, CS Affiliated QPAMs, and the CS Related QPAMs to continue to
rely on the exemptive relief provided by Prohibited Transaction Class
Exemption (PTE) 84-14. The Department is granting this exemption to
ensure that the participants and beneficiaries of ERISA-covered Plans
and IRAs managed by the UBS QPAMs, CS Affiliated QPAMs, and the CS
Related QPAMs (together, Covered Plans) are protected. This exemption
provides only the relief specified in the text of the exemption and
does not provide relief from violations of any law other than the
prohibited transaction provisions of Title I of ERISA and the Code
expressly stated herein.
---------------------------------------------------------------------------
\1\ 88 FR 30785 (May 12, 2023).
---------------------------------------------------------------------------
The Department intends for the terms of this exemption to promote
adherence by the UBS QPAMs, CS Affiliated QPAMs, and the CS Related
QPAMs to basic fiduciary standards under Title I of ERISA and the Code.
Most importantly, the Department's primary objective in granting this
time-limited exemption is to ensure that Covered Plans can terminate
their relationships with one of these QPAMs in an orderly and cost-
effective fashion in the event the fiduciary of a Covered Plan
determines that it is prudent to do so.
Based on UBS and CSAM's (the Applicants') adherence to all the
conditions of the exemption, the Department makes the requisite
findings under ERISA Section 408(a) that the exemption is: (1)
administratively feasible, (2) in the interest of Covered Plans and
their participants and beneficiaries, and (3) protective of the rights
of the participants and beneficiaries of Covered Plans. Accordingly,
affected parties should be aware that the conditions incorporated in
this exemption are, individually and taken as a whole, necessary for
the Department to grant the relief requested by the Applicants. Absent
these or similar conditions, the Department would not have granted this
exemption. Further, non-compliance with any of these conditions will
result in loss of the availability of this exemption.
Background
1. Credit Suisse Group AG (CSG) is currently a publicly traded
corporation headquartered in Zurich, Switzerland that owns a 100%
interest in Credit Suisse AG (CSAG). Currently, two Credit Suisse asset
management affiliates, Credit Suisse Asset Management, LLC (CSAM LLC)
and Credit Suisse Asset Management Limited (CSAM Ltd.) (together, the
CS Affiliated QPAMs) manage the assets of Covered Plans on a
discretionary basis. CSAG also owns a five percent or more interest in
certain other entities that may provide investment management services
to plans but that are not affiliates of CSAG (the CS Related QPAMs).
2. UBS AG (UBS) is a Swiss-based global financial services company
organized under the laws of Switzerland. UBS Asset Management
(Americas) Inc., UBS Realty Investors LLC, UBS Hedge Fund Solutions
LLC, and UBS O'Connor LLC are currently the four UBS affiliates that
rely on PTE 84-14 (the UBS QPAMs).
PTE 84-14
3. PTE 84-14 reflects the Department's conclusion that it could
provide broad relief from the prohibited transaction provisions of
ERISA Section 406(a) and Code Section 4975(c)(1) only if the
commitments and the investments of plan assets and the negotiations
leading thereto are the sole responsibility of an independent
discretionary manager that meets the exemption's conditions, known as a
QPAM.
4. Section I(g) of PTE 84-14 prevents an entity that may otherwise
meet the definition of a QPAM from utilizing the exemptive relief
provided by PTE 84-14 for itself and its client plans, if that entity
or an ``affiliate'' thereof \2\ or any
[[Page 36338]]
direct or indirect owner of a 5 percent or more interest in the QPAM
has within 10 years immediately preceding the transaction, been either
convicted or released from imprisonment, whichever is later, as a
result of criminal activity described in that section.
---------------------------------------------------------------------------
\2\ Section VI(d) of PTE 84-14 defines the term ``affiliate''
for purposes of Section I(g) as ``(1) Any person directly or
indirectly through one or more intermediaries, controlling,
controlled by, or under common control with the person, (2) Any
director of, relative of, or partner in, any such person, (3) Any
corporation, partnership, trust or unincorporated enterprise of
which such person is an officer, director, or a 5 percent or more
partner or owner, and (4) Any employee or officer of the person
who--(A) Is a highly compensated employee (as defined in Section
4975(e)(2)(H) of the Code) or officer (earning 10 percent or more of
the yearly wages of such person), or (B) Has direct or indirect
authority, responsibility or control regarding the custody,
management or disposition of plan assets.''
---------------------------------------------------------------------------
5. The inclusion of Section I(g) in PTE 84-14 is, in part, based on
an expectation that QPAMs will maintain a high standard of integrity.
This expectation extends not only to the QPAM itself, but also to those
who may be in a position to influence the QPAM's policies.
6. Since 2014, various entities within the corporate umbrellas of
UBS and CSAG have been collectively convicted of five disqualifying
crimes described in Section I(g) of PTE 84-14 (the Convictions). To
protect Covered Plans from the costs and harms that could arise if the
UBS QPAMs and the CS Affiliated and CS Related QPAMs suddenly lost
their ability to engage in potentially beneficial transactions under
PTE 84-14 due to these Convictions, the Department issued a number of
temporary individual exemptions.\3\
---------------------------------------------------------------------------
\3\ In connection with the Credit Suisse-related convictions,
the Department issued the following exemptions: PTE 2022-01 (87 FR
1186 (Jan. 10, 2022)); PTE 2019-07 (84 FR 61928 (Nov. 14, 2019));
PTE 2015-14 (80 FR 59817 (Oct. 2, 2015)); PTE 2014-11 (79 FR 68716
(Nov. 18, 2014)). In connection with the UBS-related convictions,
the Department issued: PTE 2020-01 (85 FR 8020 (Feb. 12, 2020)); PTE
2019-01 (84 FR 6163 (Feb. 26, 2019)); PTE 2017-07 (82 FR 61903 (Dec.
29, 2017)); PTE 2016-17 (81 FR 94049 (Dec. 22, 2016)); PTE 2013-09
(78 FR 56740 (Sep. 13, 2013)).
---------------------------------------------------------------------------
7. On April 17, 2023, UBS and CSAM (and their affiliated QPAMs)
submitted an application with the Department requesting modifications
to their existing exemptions. In their request, UBS and CSAM stated
that, following the Merger, ``it is important that the combined bank be
able to continue the asset management businesses that the two banks
currently maintain independently, including their subsidiaries' QPAM
services.'' UBS and CSAM requested ``separate somewhat harmonized,
exemptions because at this time it is not clear when, and how, the
Credit Suisse QPAMs will be restructured within the UBS structure after
closing.'' Essentially, in the application, UBS and CSAM sought the
Department's approval to allow the affected QPAMs to continue relying
on the terms and conditions of their existing exemptions.
Harm to Covered Plans in the Absence of QPAM Relief \4\
---------------------------------------------------------------------------
\4\ CSAM submitted these representations to the Department on
March 16, 2023, in connection with an exemption application
submitted by CSAM (the CSAM Application), for the CS Affiliated and
Related QPAMs to continue to rely upon PTE 84-14 beyond the one-year
term of their current individual exemption (PTE 2022-01), which
expires on the earlier of July 21, 2023, or the closing date of the
Merger. The CSAM Application was submitted to the Department before
the Merger was announced. The Department closed the CSAM Application
upon receipt of the CSAM and UBS modification request discussed
herein. The CSAM Application and supporting documents are available
to the public through EBSA's Public Disclosure Office, by
referencing D-12089.
---------------------------------------------------------------------------
8. CSAM represents that if the CS Affiliated and Related QPAMs lose
the ability to rely upon PTE 84-14, the Covered Plan clients of those
QPAMs would suffer the time and expense of finding replacement asset
managers where they otherwise might not choose to do so. Further,
transactions currently dependent on the QPAM Exemption would be in
default, and counterparties may provide less advantageous pricing, or
not bid at all, because the plan's investment manager is not a QPAM.
CSAM submits that Covered Plans that choose to remain with CSAM
following CSAM's loss of QPAM relief would have a circumscribed set of
transactions available to them, or their transactions could be more
expensive because of the preference that counterparties have for
transacting business with QPAMs.
9. In its request for modifications to its existing exemption, UBS
states that the requested modifications will help ensure that the QPAMs
continue to operate without disruption to their plan clients, which in
turn is necessary for UBS and CSAM to successfully complete the Merger.
Written Comments
In the proposed exemption, 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 by May 18, 2023. The
Department received one written comment from the Applicants and no
requests for a public hearing.
I. Comments From the Applicants
Comment 1: Modify the Existing UBS AG and CSAM Exemptions
In their comment letter, the Applicants state that the
modifications to the separate existing exemptions for UBS and Credit
Suisse that the banks requested in their application are sufficiently
protective of affected Covered Plans and are carefully tailored to the
circumstances presented. They assert that:
A new, unified exemption with the additional terms
proposed by the Department is not necessary;
Modifying the existing exemptions would better account for
the time needed to integrate two large financial institutions, and the
imposition of new and expanded conditions--some of which are vaguely
worded--immediately upon the Merger is unnecessarily punitive and
burdensome; and
The past misconduct of certain Credit Suisse affiliates
does not mean additional conditions are required for the UBS QPAMs (and
vice versa).
Department's Response: The Department declines to make the
Applicants' requested change to the proposal. The consolidated
exemption proposed by the Department contains important conditions that
were not included in the previous exemptions that separately cover UBS
and Credit Suisse QPAMs. Importantly, this exemption requires cross-
institutional accountability. In this regard, no individuals who
participated in or profited from the criminal misconduct underlying any
of the five Convictions will be employed by any QPAM in the post-merger
consolidated entity. This exemption also adds the Merger Report
requirement. These added protections are essential to protect Covered
Plans considering the uncertainties surrounding the Merger due to the
lack of information the Applicants submitted to the Department
regarding the Merger.
Comment 2: Extend the Exemption Period To Align With UBS's Current
Exemption
The Applicants state that the Department should not shorten the UBS
exemption period but rather extend the exemption period for CSAM and
its current and future asset management affiliates (which expires on
July 21, 2023) to align it with the expiration of UBS's current
exemption in February 2025. Alternatively, if the Department is
unwilling to extend the exemption period for CSAM to more than a year
after the Merger closing dates, at a minimum the Department should
leave in place the current duration of UBS's existing exemption. The
Applicants' rationale is that:
UBS did not seek out a merger with Credit Suisse; UBS was
asked to buy Credit Suisse by the Swiss government to avoid a global
financial crisis that would result if Credit Suisse failed;
Shortening the exemption period does not provide any
additional
[[Page 36339]]
protection to plan clients, participants, and beneficiaries. If
anything, the Department's proposed reduction in UBS's exemption period
and certain other statements in the Department's proposal unjustifiably
and unnecessarily inject uncertainty regarding the longer-term
viability of an important business line to UBS, which undermines the
purpose of UBS's rescue of Credit Suisse;
Most of the ``underlying conduct'' at issue was committed
a number of years ago by non-QPAM entities, and it involved personnel
who no longer are at UBS or Credit Suisse. Further, one of the
convictions in issue will fall outside the QPAM disqualification period
during the one-year exemption period the Department has proposed, and
another a few months later; and
The primary regulators of UBS and Credit Suisse have
determined that the merger is in the interest of banking customers and
clients and of the financial services industry.
Department's Response: The Department declines to extend the term
of this exemption. As stated above, to date, the Department has
received very limited information from the Applicants regarding the
Merger. Further, the proposed exemption had only a six-day comment
period. If UBS believes that additional exemptive relief is warranted,
it should submit an additional application, which would allow the
Department to develop a more complete administrative record, including
through a longer comment period.
Comment 3: Merger Report
The Applicants state that UBS should not be required to submit a
Merger Report to the Department every 120 days; nor should UBS be
required to provide that report to Covered Plan fiduciaries. The
Applicants state that the addition of multiple reports is burdensome,
unrelated to the protection of plans, and would unnecessarily distract
UBS from the operation of its own business lines and the task of
evaluating and integrating Credit Suisse's businesses. In particular,
the Applicants ask the Department to remove the requirement that, in
the Merger Report, UBS provide ``detailed information regarding the
costs to ERISA-covered Plans and IRAs . . . that would arise if this
one-year exemption is not renewed.'' The Applicants view this
information as the most burdensome part of an application to prepare
and state that requiring it several times within one year is
unnecessarily burdensome. They maintain that these additional periodic
reports also risk confusing and distracting plan clients. UBS already
would be required to send two notices to plan clients under the
Department's proposal.\5\
---------------------------------------------------------------------------
\5\ UBS is required to send two notices to Covered Plans: (1) a
notice of its obligations under Section III(k)(7); and (2) a copy of
the exemption along with a summary under Section III(l). The Merger
Report would represent the third notice that UBS is required to send
to Covered Plans.
---------------------------------------------------------------------------
Alternatively, if the Department retains the requirement for this
new report, the Applicants request that they should be required to
provide the Merger Report only once, halfway through the exemption
period. For example, if the exemption period remains one year, the
Applicants would send the report within 180 days after the exemption's
effective date.
Department's Response: The Department declines to make the
Applicants' requested changes, in part. First, the Department declines
to remove the Merger Report requirement. The Department views the
Merger Report as an essential component of this exemption due to the
fact that the Applicants submitted almost no detail regarding the
specifics of how Credit Suisse will be integrated into UBS post-merger.
Thus, the Merger Report is an important supplement to the record and
will inform the Department regarding post-merger integration
developments that potentially impact Covered Plans.
However, the Department agrees that the first Merger Report
required under this exemption should be due within six months after the
exemption's effective date. A second Merger Report will be due 12
months after the exemption's effective date. While the Department
agrees that the Merger Report does not need to include ``detailed
information regarding the costs to ERISA-covered Plans and IRAs that
would arise if this one-year exemption is not renewed,'' this
information must be included in any future request by UBS to extend
this exemption and will be part of the record attributable to that
exemption request. The Department also notes that the Board of
Governors of the Federal Reserve will require UBS Group AG to submit an
Implementation Plan within three months of the closing of the Merger.
The Department believes that there will be at least some content
overlap between the Implementation Report and the Merger Report and
that some of the information prepared for inclusion in the
Implementation Report can be also used in the Merger Report.
Comment 4: Best Knowledge
The Applicants request the removal of the proposed new definition
of ``best knowledge,'' ``to the best of one's knowledge,'' ``best
knowledge at that time,'' in Section I(i) of the proposed exemption.
The Applicants state that such terms are defined to include matters
that are known to the applicable individual or should be known to such
individual upon the exercise of such individual's due diligence
required under the circumstances, and, with respect to an entity other
than a natural person, such term includes matters that are known to the
directors and officers of the entity or should be known to such
individuals upon the exercise of such individuals' due diligence
required under the circumstances.
The Applicants state that Credit Suisse's current exemption does
not define the term ``best knowledge'' while UBS's current exemption
does not even have a ``best knowledge'' requirement. The Applicant
submits that the new definition converts an actual knowledge standard
into a ``seeming negligence'' standard, introducing unnecessary
uncertainty into the standards for compliance with the exemption.
Department's Response: The Department declines to make the
requested change.\6\ The Department notes that the current exemptions
relied on by UBS and Credit Suisse-related QPAMs fail to describe the
``best knowledge'' standard. The inclusion of language defining ``best
knowledge'' adds clarity and consistency and removes the uncertainty
surrounding what knowledge is expected from the entity or an
individual.
---------------------------------------------------------------------------
\6\ Contrary to UBS's assertion, both the previous UBS and
Credit Suisse exemptions contain the ``best knowledge'' requirement
in certain conditions. In its comment on [the proposed version of?]
PTE 2017-07, UBS requested the addition of ``best knowledge''
language in certain conditions of that exemption.
---------------------------------------------------------------------------
Comment 5: Material Changes
The Applicants request the Department to delete footnote 2 from the
proposed exemption, which states that the exemption would ``cease to
apply'' ``if there is any material change in a transaction covered by
the exemption, or in a material fact or representation that is part of
the record attributable to D-12089.\7\ The Applicants maintain that the
plain language of the reference in the footnote to ``a transaction
covered by the exemption'' would suggest that a change in a transaction
that relies on PTE 84-14 would render PTE 84-14 unavailable. The
Applicants presume that this is not the Department's intended meaning,
since a loan relying on a QPAM exemption, for example,
[[Page 36340]]
may be revised at any time in the best interest of plans.
---------------------------------------------------------------------------
\7\ See 88 FR at 30786.
---------------------------------------------------------------------------
Department's Response: The Department is revising footnote 2, so
that that the referenced language refers to a material change in the
Merger or to the record attributable to D-12089, and not to a
transaction that relies on PTE 84-14.
Comment 6: Finalize and Publish the Exemption by May 24, 2023
The Applicants request that exemptive relief be in place by May 24,
2023 to ensure that there is time for other required disclosures in
advance of the anticipated May 31, 2023 closing.
Department's Response: The Department was unable to publish this
final exemption by May 24, 2023, due to the short amount of time
between the Merger's announcement and planned closing date and the
Applicants' submission of their application on April 17, 2023.
Comment 7: Audit Periods Pre-Dating the Merger
The Applicants request clarification that audit reports for time
periods preceding the Merger are governed by the UBS and Credit Suisse
exemptions currently in effect prior to the Merger.
Department's Response: The Department confirms that audit reports
for time periods before the Merger closing date (and the effective date
of this exemption) are governed by the UBS and Credit Suisse exemptions
that are were in effect during those time periods (and that precede the
effective date of this exemption).
Comment 8: Audit Report Review
The Applicants request a revision to Section III(j)(8) of the
proposed exemption, which would require the audit report for each UBS
QPAM to be (1) provided to the Risk Committee of UBS Group AG, not the
Risk Committee of UBS AG, and (2) reviewed and certified by a senior
executive officer of UBS Group AG. The Applicants state that it would
be more protective and consistent with UBS's current practice for the
audit report to be provided to the Risk Committee of UBS Group AG,
which is the parent of UBS AG.
Department's Response: The Department agrees with the Applicants'
requested revision and has modified Section III(j)(8) accordingly.
Comment 9: Audit Report Review
Sections III(i) and III(j) of the proposed exemption imposes
separate audit report requirements for the CS Affiliated QPAMs and the
UBS Affiliated QPAMs, respectively. This means that the CS QPAMs and
UBS QPAMs need to continue to undergo separate audits during the term
of this exemption. Further, proposed subsections III(i)(8) and
III(j)(8) require (a) CSAG's Board of Directors and a Credit Suisse
officer to review and certify the CS Affiliated QPAM audits, and (b)
UBS's Board and a UBS officer review and to certify the UBS Affiliated
QPAM audits.
The Applicants submit that aligning the recipients of the audit
reports would simplify compliance and request that both the CS
Affiliated QPAM audits and the UBS Affiliated QPAM audits be submitted
to and certified by UBS's Board and a UBS officer.
Department's Response: The Department agrees with the Applicants
and has revised Section III(i)(8) accordingly to align with Section
III(j)(8).
Comment 10: Recipients of Notice
Section III(l) of the proposed exemption requires the Affiliated
QPAMs to provide notice of the proposed and final exemption as
published in the Federal Register, along with a summary describing the
facts that led to the Convictions and a prominently displayed statement
that the Convictions result in a failure to meet a condition in PTE 84-
14 to ``each sponsor and beneficial owner of a Covered Plan,'' and
``the sponsor of an investment fund in any case where an Affiliated
QPAM acts as a sub-adviser to the investment fund in which such ERISA-
covered plan and IRA invests.''
The Applicants request that the Department revise Section III(l) so
that the Affiliated QPAMs do not have to send these notices to ERISA-
covered Plans and IRAs for whom UBS neither relies on the QPAM
exemption nor has represented to clients that it is relying on the QPAM
exemption. The Applicants submit that requiring notice to be provided
to ``the sponsor of an investment fund in any case where an Affiliated
QPAM acts as a sub-adviser to the investment fund in which such ERISA-
covered plan and IRA invests'' could be interpreted as requiring the
Affiliated QPAMs to provide notice to all ERISA-covered plans and IRAs,
rather than only to plans for which UBS relies on the QPAM exemption or
has represented that it is relying on the QPAM exemption.
Department's Response: The Department disagrees with the
Applicants' concerns with the notice requirement. However, the
Department has revised proposed condition (III)(l) to expressly require
UBS to only to send the required notices to Covered Plans and not to
accounts for which UBS neither relies on the QPAM exemption nor has
represented that it is relying on the QPAM exemption.
Comment 11: Exemption Report Recipients
The Applicants request the Department to revise proposed Section
III(n)(2)(iv) to clarify that the Exemption Report required by the
exemption only must be provided to officers of either CSAG or UBS AG,
but not both.
Department's Response: The Department declines to make the
Applicants' requested change. Cross-institutional accountability is an
important aspect of this exemption given the uncertainty surrounding
the Merger. Section III(n)(2)(iv) requires the Exemption Report to be
provided to the appropriate officers of CSAM or UBS AG, and the
Department believes this is a minimal burden that adds protection for
Covered Plans.
Comment 12: Imposing Internal Procedures
Section (o) of the proposed exemption states: ``UBS Group AG
imposes its internal procedures, controls, and protocols on each
Misconduct Entity to reduce the likelihood of any recurrence of conduct
that is the subject of the Convictions.'' The Applicants request the
Department to revise Section III(o) to refer to UBS Group AG instead of
UBS AG because the Credit Suisse QPAMs might not report to UBS AG after
the Merger.
Department's Response: The Department agrees with the Applicants'
requested change and has modified Section III(o) accordingly.
Comment 13: Deferred Prosecution Agreements (DPAs) or Non-Prosecution
Agreements (NPAs)
The Applicants request that the Department revise Section III(r) to
clarify that UBS only needs to disclose a DPA or NPA that is entered
into during the exemption period, to avoid any suggestion that UBS must
redisclose pre-existing DPAs or NPAs.
Department's Response: The Department agrees with the Applicants'
requested revision and confirms that UBS does not need to redisclose
pre-existing DPAs or NPAs, provided that such pre-existing DPAs or NPAs
were previously disclosed to the Department. However, the Department
notes that all such pre-existing DPAs and NPAs must be included as part
of any request by UBS to extend this exemption.
[[Page 36341]]
Comment 14: Alternative Non-QPAM-Based Exemption
The Applicants state that the Department should not proceed with an
alternative, non-QPAM-based individual exemption. The Department
invited comments on whether to ``develop[ ] an individual exemption on
its own motion that would protect affected Covered Plans by permitting
some, but not all, of the transactions covered by PTE 84-14.'' The
Department stated that, if it ``took that approach, the UBS/CSAG
affiliated entities would no longer rely on or reference PTE 84-14 for
relief, but rather would rely on the new individual exemption for any
relief, which would not be based on their status as QPAMs status under
PTE 84-14.'' The Applicants oppose such an alternative. They maintain
that the current QPAMs have existing contracts that expressly rely on
the QPAM exemption or represent that the asset manager is a QPAM, and
state that those contracts do not account for an alternative such as
the Department describes. Moreover, the Applicants assert that the QPAM
exemption is widely accepted and understood by sophisticated clients;
it cannot suddenly be replaced, and withdrawing its availability from a
particular asset manager would put that firm at a competitive
disadvantage. Applicants claim that this is directly contrary to the
purposes of financial strength and stability that regulators intended
to be achieved by UBS-Credit Suisse merger. Applicants state that if
the Department is interested in creating an alternative to the QPAM
exemption, it should make the alternative available to all asset
managers concurrently with the QPAM exemption, so that the alternative
can gain broad market adoption and any such alternative would need to
be clearly delineated and published for notice and comment.
Department's Response: The Department appreciates the Applicants'
response to the request for information on the idea of a non-QPAM-
linked exemption and will take the response into account in any future
considerations on this issue. Any decision to develop a non-QPAM-linked
individual exemption will be subject to a full notice and comment
period.
Comment 15: Miscellaneous Other Requested Revisions From the Applicants
Applicants also requested several other miscellaneous revisions to
the proposed exemptions, as follows:
A. Remove references to Credit Suisse Asset Management Limited
because it is no longer acting as a QPAM. Specifically, strike Section
I(a)(3), and remove references to Credit Suisse Asset Management
Limited from Sections I(a)(4) and I(b)(1).
B. Revise Section I(c)(2) which read, ``(2) the judgment of
conviction against CSSEL in Case Number 1:21-cr-00520-WFK (the ``CSSEL
Conviction'');'' to more fully describe the conviction as: ``(2) the
judgment of conviction against CSSEL for one count of conspiracy to
commit wire fraud (18 U.S.C. 1349) that was entered in the District
Court for the Eastern District of New York on July 22, 2022, in Case
Number 1:21-cr-00520-WFK (the `CSSEL Conviction').''
C. Revise Section I(c)(5) to include the italicized regarding the
appellate court decision upholding the conviction: ``the judgment of
conviction on February 20, 2019, against UBS and UBS France in case
Number 1105592033 in the French First Instance Court and a decision
upholding the February 20, 2019 judgment of the French First Instance
Court (the `2019 French Conviction').''
D. Correct the presiding judge's initials in the case number in
Sections I(c)(4), I(f), and III(a)(i) to: ``3:15-cr-00076-SRU.''
E. In Section I(e), correctly identify UBS and Credit Suisse
entities that are engaging in the upcoming merger transaction, as
follows: ``The term `Exemption Period' means the one-year period that
begins on the closing date of the acquisition of CSG by UBS Group AG
(hereinafter, the Merger).''
F. In Section I(h), revise ``CS'' to ``CSAG.''
Department's Response: The Department accepts the Applicants'
requested revisions and has made the corresponding changes.
Publicly Available Information
The complete application file (D-12089) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC 20210. For a more complete
statement of the facts and representations supporting the Department's
decision to grant this exemption, please refer to the notice of
proposed exemption published on May 12, 2023, at 88 FR 30785.
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) does not relieve a fiduciary or other party
in interest from certain requirements of other ERISA provisions,
including but not limited to 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 their duties respecting the
plan solely in the interest of the plan's participants and
beneficiaries and in a prudent fashion in accordance with ERISA Section
404(a)(1)(B).
(2) As required by ERISA Section 408(a), the Department hereby
finds that the exemption is: (a) administratively feasible; (b) in the
interests of Covered Plans and their participants and beneficiaries;
and (c) protective of the rights of the Covered Plan's participants and
beneficiaries.
(3) This exemption is supplemental to, and not in derogation of,
any other ERISA provisions, 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 for determining whether the transaction is in fact a
prohibited transaction.
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transactions
that are the subject of the exemption and are true at all times.
Accordingly, after considering the entire record developed in
connection with the Applicants' exemption application, the Department
has determined to grant the following exemption under the authority of
ERISA Section 408(a) in accordance with the Department's exemption
procedures set forth in 29 CFR part 2570, subpart B: \8\
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\8\ 76 FR 66637, 66644 (October 27, 2011).
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Exemption
Section I. Definitions
(a) Names of Certain Corporate Entities:
(1) The term ``CSG'' means Credit Suisse Group AG, a publicly
traded corporation organized under the laws of Switzerland.
(2) The term ``CSAG'' means Credit Suisse AG and is 100% owned by
CSG.
(3) The term ``CSSAM LLC'' or CSAM means Credit Suisse Asset
Management, LLC which is a Credit Suisse asset management affiliate.
(4) The term ``CSSEL'' means Credit Suisse Securities (Europe)
Limited and is headquartered in London, United Kingdom and indirectly a
wholly owned subsidiary of CSG.
[[Page 36342]]
(5) The term ``UBS'' means UBS AG, a publicly traded corporation
organized under the laws of Switzerland.
(6) The term ``UBS Americas'' means UBS Asset Management (Americas)
Inc. and is one of the four UBS affiliates and is wholly owned by UBS
Americas, Inc., a wholly owned subsidiary of UBS AG.
(7) The term ``UBS France'' means UBS (France) S.A. and is a wholly
owned subsidiary of UBS incorporated under the laws of France.
(8) The term ``UBS Hedge Fund Solutions LLC'' was formerly known as
UBS Alternative and Quantitative Investments, LLC is one of four UBS
affiliates and is wholly owned by UBS Americas Holding LLC, a wholly
owned subsidiary of UBS AG.
(9) The term ``UBS O'Connor LLC'' is one of four UBS affiliates and
is wholly owned by UBS Americas Holding LLC, a wholly owned subsidiary
of UBS AG.
(10) The term ``UBS Realty Investors LLC'' is one of the four UBS
affiliates and is wholly owned by UBS Americas, Inc., a wholly owned
subsidiary of UBS AG.
(11) The term ``UBS Securities Japan'' means UBS Securities Japan
Co. Ltd, a wholly owned subsidiary of UBS incorporated under the laws
of Japan.
(b) The term ``Affiliated QPAM'' means (1) the ``CS Affiliated
QPAM,'' which is Credit Suisse Asset Management, LLC (``CSAM LLC'');
and (2) the ``UBS QPAMs,'' which are UBS Asset Management (Americas)
Inc., UBS Realty Investors LLC, UBS Hedge Fund Solutions LLC, UBS
O'Connor LLC, and any future entity within the Asset Management or the
Global Wealth Management Americas U.S. divisions of UBS that qualifies
as a ``qualified professional asset manager'' (as defined in Section
VI(a) of PTE 84-14) and that relies on the relief provided by PTE 84-
14, and with respect to which UBS is an ``affiliate'' (as defined in
Part VI(d) of PTE 84-14). The term Affiliated QPAM excludes a
Misconduct Entity.
(c) 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''); (2) the judgment of conviction against
CSSEL for one count of conspiracy to commit wire fraud (18 U.S.C. 1349)
that was entered in the District Court for the Eastern District of New
York on July 22, 2022, in Case Number 1:21-cr-00520-WFK (the ``CSSEL
Conviction''); (3) the judgment of conviction against UBS Securities
Japan Co. Ltd. in case number 3:12-cr-00268-RNC in the U.S. District
Court for the District of Connecticut for one count of wire fraud in
violation of Title 18, United States Code, sections 1343 and 2 in
connection with submission of YEN London Interbank Offered Rates and
other benchmark interest rates; (4) the judgment of conviction against
UBS in case number 3:15-cr-00076-SRU in the U.S. District Court for the
District of Connecticut for one count of wire fraud in violation of
Title 18, United States Code, Sections 1343 and 2 in connection with
UBS's submission of Yen London Interbank Offered Rates and other
benchmark interest rates between 2001 and 2010; and (5) the judgment of
conviction on February 20, 2019, against UBS and UBS France in case
Number 1105592033 in the French First Instance Court and a decision
upholding the February 20, 2019 judgment of the French First Instance
Court (the 2019 French Conviction).
(d) 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 an
Affiliated QPAM relies on PTE 84-14, or with respect to which an
Affiliated QPAM (or any CSAG or UBS 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 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, an 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 Affiliated QPAM will not represent
that it is a QPAM, and will not rely on the relief described in PTE 84-
14.
(e) The term ``Exemption Period'' means the one-year period that
begins on the closing date of the acquisition of CSG by UBS Group AG
(hereinafter, the Merger).
(f) The term ``FX Misconduct'' means the conduct engaged in by UBS
personnel described in Exhibit 1 of the Plea Agreement (Factual Basis
for Breach) entered into between UBS and the Department of Justice
Criminal Division, on May 20, 2015, in connection with Case Number
3:15-cr-00076-SRU filed in the US District Court for the District of
Connecticut.
(g) The term ``Misconduct Entity'' means an entity subject to one
of the Convictions described above, i.e., UBS, UBS Securities Japan,
UBS France, CSAG and CSSEL.
(h) The term ``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 UBS owns a direct or indirect five (5) percent
or more interest, but with respect to which a Misconduct Entity is not
an ``affiliate'' (as defined in section VI(d)(1) of PTE 84-14). The
term ``Related QPAM'' excludes a Misconduct Entity.
(i) The term ``best knowledge,'' ``to the best of one's
knowledge,'' ``best knowledge at that time,'' and other similar ``best
knowledge'' terms shall include matters that are known to the
applicable individual or should be known to such individual upon the
exercise of such individual's due diligence required under the
circumstances, and, with respect to an entity other than a natural
person, such term includes matters that are known to the directors and
officers of the entity or should be known to such individuals upon the
exercise of such individuals' due diligence required under the
circumstances.
Section II. Covered Transactions
Under this exemption, the Affiliated QPAMs and the Related QPAMs
would not be precluded from relying on the exemptive relief provided by
Prohibited Transaction Class Exemption 84-14 (PTE 84-14) \9\ during the
Exemption Period, notwithstanding the ``Convictions,'' provided that
the definitions in Section I and the conditions in Section III are
satisfied.
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\9\ 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).
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Section III. Conditions
(a) The Affiliated QPAMs and the Related QPAMs (including their
officers, directors, agents other than the Misconduct Entities,
employees of such QPAMs, and employees of Misconduct Entities that do
work for 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 conduct underlying the Convictions and the FX
[[Page 36343]]
Misconduct. Further, any other party engaged on behalf of the
Affiliated QPAMs and the 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 underlying the Convictions described in Section
I(c)(1) and (2) and the 2019 French Conviction.
For all purposes of this exemption, the ``conduct'' of any person
or entity that is the ``subject of the Convictions'' encompasses any
misconduct of CSAG, CSSEL, UBS, UBS France, UBS Securities Japan, and/
or their personnel: (i) that is described in Exhibit 3 to the Plea
Agreement entered into between UBS and the Department of Justice
Criminal Division, on May 20, 2015, in connection with case number
3:15-cr-00076-SRU; (ii) that is described in Exhibits 3 and 4 to the
Plea Agreement entered into between UBS Securities Japan and the
Department of Justice Criminal Division, on December 19, 2012, in
connection with case number 3:12-cr-00268-RNC; (iii) that is the basis
of the 2019 French Conviction; and (iv) that is the subject of the CSAG
and CSSEL convictions described in Section I(c)(1) and (c)(2); and for
purposes of the exemption as well as the avoidance of doubt, the term
``participate in'' (as included paragraph (c) below), refers not only
to active participation in the criminal conduct but includes an
individual or entity's knowledge or approval of the criminal conduct,
without taking active steps to prohibit such conduct, such as reporting
the conduct to the individual's supervisors, and to the Board of
Directors.
(b) The Affiliated QPAMs and the Related QPAMs (including their
officers, directors, agents other than the Misconduct Entities,
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 and the UBS FX Misconduct. Further,
any other party engaged on behalf of the Affiliated QPAMs and the
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 Convictions;
(c) The 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 underlying the Convictions;
(d) At all times during the Exemption Period, no 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 Affiliated QPAM with respect to one or
more Covered Plans, to enter into any transaction with a Misconduct
Entity or to engage a Misconduct Entity 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. An Affiliated QPAM will not fail this condition
solely because:
(1) A CSAG (or successor) affiliate serves as a local sub-custodian
that is selected by an unaffiliated global custodian that, in turn, is
selected by someone other than an Affiliated QPAM or Related QPAM;
(2) CSAG (or a successor) provides only necessary, non-investment
related, non-fiduciary services that support the operations of an
Affiliated QPAM, at an 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 (or a successor) to provide any service to an investment fund
managed by an Affiliated QPAM or Related QPAM; or
(3) CSAG (or successor) employees are double-hatted, seconded,
supervised, or subject to the control of an Affiliated QPAM;
(e) Any failure of an Affiliated QPAM to satisfy Section I(g) of
PTE 84-14 arose solely from the Convictions;
(f) An Affiliated QPAM or a 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
underlying the Convictions; or cause the Affiliated QPAM or Related
QPAM or its affiliates to directly or indirectly profit from the
criminal conduct underlying the Convictions;
(g) No Misconduct Entity 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. No Misconduct Entity 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 Affiliated QPAM must maintain, adjust (to the extent
necessary), implement, and follow the written policies and procedures
described below (Policies).\10\ The Policies must require and be
reasonably designed to ensure that:
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\10\ This exemption does not preclude the UBS QPAMs and CS
Affiliated QPAM from maintaining separate Policies provided that the
Policies comply with this exemption.
---------------------------------------------------------------------------
(i) The asset management decisions of the QPAM are conducted
independently of the corporate and management and business activities
of each Misconduct Entity, and without considering any fee a related
local sub-custodian may receive from those decisions. This condition
does not preclude an Affiliated QPAM, as defined in Section I(b)(1),
from receiving publicly available research and other widely available
information from a CSAM affiliate, other than CSSEL, or from a UBS
affiliate;
(ii) The 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 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 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 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 QPAM complies with the terms of this one-year exemption,
and
[[Page 36344]]
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 QPAM
that engaged in the violation or failure, and the independent auditor
responsible for reviewing compliance with the Policies. A QPAM will not
be treated as having failed to develop, implement, maintain, or follow
the Policies, if it corrects any instance of noncompliance as soon as
reasonably possible upon discovery, or as soon as reasonably possible
after the 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 Affiliated QPAM must maintain, adjust (to the extent
necessary), and implement or continue a program of training during the
Exemption Period (the Training) that is conducted at least annually for
all relevant Affiliated QPAM asset/portfolio management, trading,
legal, compliance, and internal audit personnel.\11\ The Training must:
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\11\ This exemption does not preclude an Affiliated QPAM from
maintaining separate training programs provided each training
program complies with this exemption.
---------------------------------------------------------------------------
(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 (as defined in Section I(b)(1)
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
above in Section III(h). The audit requirement must be incorporated in
the Policies. The audit must cover the Exemption Period and must be
completed no later than 180 days after the Exemption Period. The prior
exemption audits required pursuant to PTE 2019-07 and PTE 2022-01 must
be completed in accordance with the audit requirements of these prior
exemptions for the prior period of November 21, 2021, through the
beginning date of the Exemption Period of this one-year exemption
within 180 days of the beginning of the Exemption Period of this one-
year exemption. These prior exemption audits and coinciding audit
reports can be combined into one audit and report for the prior
exemption audits. The prior exemption audit report(s) must be submitted
in accordance with section III(i)(9) below;
(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, CSAM, 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 CSAM 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 audits, the auditor
must issue a written report (the Audit Report) to CSAM 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 before 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(o) below, as the
basis for the auditor's conclusions in lieu of
[[Page 36345]]
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(n);
(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
or successor 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) The Risk Committee of UBS Group AG's Board of Directors is
provided a copy of the Audit Report and a senior executive officer of
UBS Group AG's Compliance and Operational Risk Control function 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. The Audit Report under this section III(i) must comply
with the delivery and certification requirements in section III(j)(8)
below;
(9) Each CS Affiliated QPAM provides its certified Audit Report to
the Department by regular mail addressed to: Office of Exemption
Determinations (OED), 200 Constitution Avenue NW, Washington, DC 20001,
or via email to [email protected]. 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) CSAM 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 CSAM and/or the CS Affiliated QPAMs;
(j)(1) Each UBS QPAM (as defined in Section I(b)(2) submits to an
audit conducted 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 UBS
QPAM's compliance with, the Policies and Training described above in
Section (h). The audit requirement must be incorporated in the
Policies. The audit must cover the Exemption Period and it must be
completed no later than 180 days after the end of the Exemption Period.
The prior exemption audits required pursuant to PTE 2020-01 must be
completed in accordance with the audit requirement of PTE 2020-01 for
the prior periods of: (1) March 20, 2022 through March 19, 2023; and
(2) March 20, 2023 through the beginning date of the Exemption Period
for this one-year exemption, and each audit must be provided within 180
days of the beginning of the Exemption Period. The prior exemption
audits and coinciding audit reports can be combined into one audit and
report for the prior exemption audits. The prior exemption audit
report(s) must be submitted in accordance with section III(j)(9) below;
(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 UBS QPAM and,
if applicable, UBS, 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 UBS 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 UBS QPAM's operational compliance with the Policies and
Training. In this regard, the auditor must test, for each UBS QPAM, a
sample of such UBS QPAM's transactions involving Covered Plans,
sufficient in size and nature to afford the auditor a reasonable basis
to determine such UBS QPAM's operational compliance with the Policies
and Training;
(5) For the audit, on or before the end of the relevant period
described in Section I(k)(1) for completing the audit, the auditor must
issue a written report (the Audit Report) to UBS and the UBS 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 UBS QPAMs. The Audit Report must include the auditor's specific
determinations regarding:
(i) The adequacy of each UBS QPAM's Policies and Training; each UBS
QPAM's compliance with the Policies and Training; the need, if any, to
strengthen such Policies and Training; and any instance of the
respective UBS QPAM's noncompliance with the written Policies and
Training described in Section III(h) above. The UBS QPAM must promptly
address any noncompliance. The UBS 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
[[Page 36346]]
recommendations (if any) with respect to strengthening the Policies and
Training of the respective UBS QPAM. Any action taken or the plan of
action to be taken by the respective UBS QPAM must be included in an
addendum to the Audit Report (such addendum must be completed prior to
the certification described in Section III(j)(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 UBS 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 UBS
QPAM has complied with the requirements under this subparagraph must be
based on evidence that each UBS QPAM has implemented, maintained, and
followed the Policies and Training required by this exemption.
Furthermore, the auditor must not solely rely on the Exemption Report
created by the Compliance Officer, as described in Section I(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(j)(3) and (4) above; and
(ii) The adequacy of the Exemption Review described in Section
III(n);
(6) The auditor must notify the respective UBS 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 UBS 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,
such UBS 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. Such certification must also include the signatory's
determination that, to the best of such 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;
(8) The Risk Committee of UBS Group AG's Board of Directors is
provided a copy of the Audit Report; and a senior executive officer of
UBS Group AG's Compliance and Operational Risk Control function must
review the Audit Report for each UBS QPAM and must certify in writing,
under penalty of perjury, that such officer has reviewed the Audit
Report;
(9) Each UBS QPAM provides its certified Audit Report, by regular
mail to: Office of Exemption Determinations (OED), 200 Constitution
Avenue NW, Washington, DC 20001; or via email to [email protected]. This
delivery must take place no later than 45 days following completion of
the Audit Report. The Audit Reports will be made part of the public
record regarding this one-year exemption. Furthermore, each UBS 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 that is entered into subsequent to the
effective date of this exemption must be submitted to OED no later than
two 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 and inspection is
otherwise permitted by law; and
(12) UBS must notify the Department of a change in the independent
auditor no later than two 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
between the terminated auditor and UBS;
(k) As of the effective date of this one-year exemption, with
respect to any arrangement, agreement, or contract between an
Affiliated QPAM and a Covered Plan, the 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 the 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 the QPAM; or any claim arising out of the failure of such 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 a Conviction covered
under this exemption. This condition applies only to actual losses
caused by the QPAM's violations. The term Actual Losses includes, but
is not limited to, losses and related costs arising from unwinding
transactions with third parties and from transitioning Plan assets to
an alternative asset manager as well as costs associated with any
exposure to excise taxes under Code section 4975 as a result of a
QPAM's inability to rely upon the relief in the QPAM Exemption;
(3) Not to require (or otherwise cause) the Covered Plan to waive,
limit, or qualify the liability of the 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 QPAM, with respect to any
investment in a separately-managed account or pooled fund subject to
ERISA and managed by such 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-
[[Page 36347]]
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 QPAM 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 UBS (and
affiliates) or CSAM (and affiliates), or damages arising from acts
outside the control of the Affiliated QPAM; and
(7) Within 120 days after the effective date of this one-year
exemption, each QPAM must provide a notice of its obligations under
this Section III(k) to each Covered Plan. For prospective Covered Plans
that enter into a written asset or investment management agreement with
a QPAM on or after a date that is 120 days after the effective date of
this exemption, the QPAM must agree to its obligations under this
Section III(k) in an updated investment management agreement between
the QPAM and such clients or other written contractual agreement.
Notwithstanding the above, a 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 QPAM may provide the
new Covered Plan with amendments that need not be signed with any
documents required by this subsection (k) within ten (10) business days
after receipt of the signed agreement.
(l) Within 60 days after the effective date of this one-year
exemption, each Affiliated QPAM provides notice of the proposed and
final 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, to each sponsor and beneficial owner of
a Covered Plan that has entered into a written asset or investment
management agreement with an Affiliated QPAM, or the sponsor of an
investment fund in any case where an 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 an Affiliated QPAM after
a date that is 60 days after the effective date of this 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 or the UBS Affiliated QPAM. The notices may be
delivered electronically (including by an email that has a link to the
one-year exemption). An Affiliated QPAM does not need to send the
required notices to plans for which an Affiliated QPAM neither relies
on QPAM nor has represented that it is relying on QPAM.
(m) The Affiliated QPAMs 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 CSAM or UBS 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;
(n)(1) Within 60 days after the effective date of this exemption,
each 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
(n), each relevant line of business within a CS Affiliated QPAM or UBS
Affiliated QPAM may designate its own Compliance Officer(s).
Notwithstanding the above, the appointed Compliance Officer may not be
a person who: (i) participated in the criminal conduct underlying the
Convictions, or knew of, or (ii) had reason to know of, the criminal
conduct without taking 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.\12\ With respect to the Compliance Officer, the following
conditions must be met:
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\12\ Pursuant to PTE 2020-01 and PTE 2022-01 the Compliance
Officer must conduct an exemption review (annual review) for each
period corresponding to the audit periods set forth in those
exemptions and the Compliance officer's written report submitted to
the Department within three (3) months of the end of the period to
which it relates. Accordingly, the final exemption review pursuant
to PTE 2020-01 must cover the period March 19, 2022 through the
beginning date of the Exemption Period of this one-year exemption
and must be completed within three (3) months from the end of the
period to which it relates. Also, the final exemption review
pursuant to PTE 2022-01 must cover the period November 21, 2022
through the beginning date of the Exemption Period of this one-year
exemption and must be completed within three (3) months from the end
of the period to which it relates.
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(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 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 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 time period; the most recent Audit Report issued
pursuant to this exemption or PTE 2020-01 or PTE 2022-01; any material
change in the relevant business activities of the 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 Affiliated QPAMs;
(ii) The Compliance Officer prepares a written report for the
Exemption Review (an Exemption Report) that (A) summarizes their
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
[[Page 36348]]
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
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 CSAM and UBS and to each Affiliated QPAM to which such
report relates, and to the head of compliance and the general counsel
(or their functional equivalent) of CSAM, UBS, the relevant Affiliated
QPAM. The Exemption 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 Exemption Period, and
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;
(o) UBS Group AG imposes its internal procedures, controls, and
protocols on each Misconduct Entity to reduce the likelihood of any
recurrence of conduct that is the subject of the Convictions;
(p) 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 UBS or CSAM or an affiliate of either failed to
comply in all material respects with any requirement imposed by such
regulatory authority in connection with the Convictions;
(q) Each 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
Affiliated QPAM relies upon the relief in this exemption;
(r) During the Exemption Period, UBS 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 UBS or CSAM or any of their affiliates (as defined in
Section VI(d) of PTE 84-14) during the Exemption Period 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 during the Exemption period, as permitted
by law, regarding the agreement and/or conduct and allegations that led
to the agreement. UBS does not need to redisclose pre-existing DPAs or
NPAs, provided that such pre-existing DPAs or NPAs were previously
disclosed to the Department. However, the Department notes that all
such pre-existing DPAs and NPAs must be included as part of any request
by UBS to extend this exemption;
(s) Within 60 days after the effective date of this exemption, each
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 of the Policies (Summary Policies) that
accurately summarizes key components of the 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.\13\ With respect to this
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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\13\ 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.
---------------------------------------------------------------------------
(t) An Affiliated QPAM will not fail to meet the terms of this one-
year exemption solely because a different Affiliated QPAM fails to
satisfy a condition for relief described in Section III(c), (d), (h),
(i), (j), (k), (l), (m), (s) or (u); or if the independent auditor
described in Section III(i) or (j) fails to comply with a provision of
the exemption other than the requirement described in Section
III(i)(11) and (j)(11), provided that such failure did not result from
any actions or inactions of CSAM or UBS or its affiliates;
(u) All the material facts and representations set forth in the
Summary of Facts and Representations are true and accurate; and
(v) Every six months following the merger of UBS and CSAG, UBS must
submit a written report to the Department that updates the progress of
the Merger. This report must also be provided to Covered Plan
fiduciaries (including via an electronic link). Additionally, in its
first report to the Department, UBS must: (1) identify the QPAMs using
this exemption as the date of the Report; (2) provide details regarding
the extent to which the CS Affiliated QPAMs have been integrated into
UBS's operations and any other relevant changes with respect to any
QPAMs that are using this exemption; and (3) any other changes, whether
operational or otherwise, that impact any requirements under this
exemption;
Applicability Date: The exemption will be in effect for a period of
one year beginning on the closing date of the Merger.
Signed at Washington, DC, this 31st day of May 2023.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2023-11864 Filed 6-1-23; 8:45 am]
BILLING CODE 4510-29-P
