Senator Elizabeth Warren is calling on the Labor Department to make it tougher on companies convicted of financial crimes by limiting their ability to control Americans’ retirement benefits.
In a letter supporting proposed regulatory changes to the Employee Benefits Administration, Warren, Democrat, Massachusetts, and co-author Sen. Tina Smith, Democrat, said retirees would receive additional protections and transparency. Outline why you feel you need
“We have long been concerned that EBSA’s use of individual exemptions undermines the Department of Labor’s (DOL) responsibility to protect American workers and their retirement savings from greed, corruption and mismanagement. have been,” they wrote.
At issue is an exemption process called the Qualified Professional Asset Manager (QPAM) exemption. This allows companies to avoid conflict of interest issues and allows companies convicted of financial crimes abroad to continue to do business with institutions that manage retirement and pension accounts. Subject to the Employee Retirement Income Security Act (ERISA).
The proposed change would, among other things, require companies granted a waiver to report it to authorities. conviction types that will now be outright banned. Generally, there are stricter conditions to be met, from the types of transactions covered to the level of assets a company needs to qualify .
Warren and Smith have been complicit in the matter in the past, most recently when Credit Suisse was granted a new five-year QPAM exemption in February, but Mozambique will face $547 million in illicit loans in 2021. A guilty verdict has been handed down.
In a statement to MarketWatch, Warren said, “It’s very, very easy to count on the fact that the investment firms that workers are using for retirement savings don’t have a long list of fraud settlements or convictions. It’s important,” he said. “The Department of Labor has a responsibility to protect American workers, and these proposed QPAM rules for retirement asset managers are an important first step.”
“I think they went overboard.”
The financial industry opposes the proposed changes. “This could have implications for the asset management business that it shouldn’t have by limiting participation,” said David Kaleda, attorney at Groom Law Group, which represents asset managers and plan sponsors. said. “I think they went overboard.”
The impact of imposing tighter restrictions is that retirement plan sponsors and asset managers will have to change the way they do business, which can be costly. These increased costs could be passed on to retirement savers. That’s the concern of Allison Wielobob, legal counsel for the American Retirement Association, an umbrella industry group of various service providers to the US private retirement system.
“QPAM is so big that its reliance cannot be overstated. If it changes, someone will have to pay for it. said.
Other risks to retirement savers
Retirement savers don’t just cost more, they take more risk, according to James S. Henry, former chief economist at McKinsey and now a lecturer and fellow in the Global Justice Program at Yale University. There is a possibility. Henry recently testified before the Office of Employment Benefits, and so did Wielobob.
Savers are also subject to poor investment choices by managers who do not have strict controls on conflicts of interest, he said. He pointed to pension funds like the Ontario Teachers Pension Plan, which recently wrote off its $95 million investment in FTX after the crypto exchange declared bankruptcy.
“Who is putting these pension funds into risky investments?” Henry asked. “If Grandpa’s pension is gone, consumers will be worried, and they won’t be able to get health insurance. All because someone invested it in nasty security.”
