No Asset Management Ban For Credit Suisse

May 21 2014 | 12:16pm ET

A felony conviction generally bars a firm from managing money on behalf of clients. But Credit Suisse will be spared that draconian penalty in the wake of its tax-evasion settlement, at least for now.

The Securities and Exchange Commission gave the bank a temporary exemption from the rule after it became the first financial institution in more than a decade to plead guilty to a crime. In its case, Credit Suisse pled out to allegations that it helped U.S. citizens evade taxes, agreeing to pay $2.6 billion.

While insisting on a guilty plea, prosecutors strove to avoid having it be the “death penalty” for a firm that such a move has been in the past. The Justice Department asked for—and won—promises from federal and state officials not to seek harsh penalties for Credit Suisse that could have forced it to stop doing business in the U.S.

Credit Suisse had argued that its tax fraud did not involve its asset management business, and that barring it could be a “hardship” for investors and would have a “severe” impact on its business and employees. “Neither the protection of investors nor the public interest would be served” by an asset-management ban, it said.

The SEC unanimously approved the temporary reprieve, saying Credit Suisse “made the necessary showing to justify” it. The regulator will later consider a permanent exemption.


In Depth

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...