Notice2026-08625
Exemption for Certain UBS AG (UBS) Asset Managers Located in Zurich, Switzerland
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 4, 2026
Effective
May 5, 2026
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This exemption allows current and future UBS-related asset managers to continue to rely on Prohibited Transaction Exemption (PTE) 84-14, from May 5, 2026, to May 5, 2035, if certain conditions are met, notwithstanding four convictions and one non-prosecution agreement involving affiliated entities of UBS.
Full Text
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<title>Federal Register, Volume 91 Issue 85 (Monday, May 4, 2026)</title>
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[Federal Register Volume 91, Number 85 (Monday, May 4, 2026)]
[Notices]
[Pages 24010-24020]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08625]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2026-03; Application Number D-12118]
Exemption for Certain UBS AG (UBS) Asset Managers Located in
Zurich, Switzerland
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: This exemption allows current and future UBS-related asset
managers to continue to rely on Prohibited Transaction Exemption (PTE)
84-14, from May 5, 2026, to May 5, 2035, if certain conditions are met,
notwithstanding four convictions and one non-prosecution agreement
involving affiliated entities of UBS.
DATES: Exemption date: This exemption will be in effect for the period
beginning on May 5, 2026, and ending on May 5, 2035.
FOR FURTHER INFORMATION CONTACT: Nicholas Schroth, Office of Exemption
Determinations, Employee Benefits Security Administration, U.S.
Department of Labor, (202) 693-8540 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
Benefits of the Exemption
This exemption is intended to protect Covered Plans \1\ from
incurring the harms and costs that UBS represents would arise if UBS
Qualified Professional Asset Managers (QPAMs) are no longer able to
rely on the relief described in PTE 84-14, due to UBS QPAMs'
noncompliance with that class exemption. Among other things, this
exemption ensures that a Covered Plan can terminate its relationship
with a UBS QPAM in an orderly and cost-effective fashion if the Covered
Plan fiduciary determines that it is prudent to do so. This exemption
requires UBS QPAMs to adhere to basic fiduciary standards and
responsibilities mandated by Title I of ERISA and the Code and
reinforces the obligation of UBS QPAMs to act with integrity on behalf
of Covered Plans, as required by PTE 84-14.
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\1\ ``Covered Plan'' is defined in Section I(e) to mean 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, as defined in Section
I(b), relies on PTE 84-14, or with respect to which an Affiliated
QPAM (or any 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.
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Background
UBS requested an exemption in accordance with the Department's
exemption procedures.\2\ On February 26, 2026, the Department published
a notice of proposed exemption in the Federal Register (the Proposed
Exemption),\3\ for certain current and future UBS-related asset
managers to continue to rely on PTE 84-14 until May 4, 2031, if certain
conditions are met, notwithstanding four judgments of conviction and
one non-prosecution agreement involving entities within UBS's corporate
umbrella. Based on the record and representations made by UBS, the
Department has determined to grant the Proposed Exemption with the
modifications discussed below.
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\2\ 29 CFR part 2570, subpart B at 89 FR 4662, January 24, 2024.
Effective December 31, 1978, section 102 of Reorganization Plan No.
4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the
Secretary of the Treasury to issue exemptions of the type requested
by the Applicant to the Secretary of Labor. Therefore, this notice
of exemption is issued solely by the Department.
\3\ See 91 FR 9645.
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This exemption provides only the relief specified herein and does
not provide relief from any other law. If any material statement in the
record attributable to this exemption is not, or may no longer be,
completely and factually accurate, UBS must immediately alert the
Department.
Written Comments
In the Proposed Exemption, the Department invited all interested
persons to submit written comments and request a public hearing. All
comments and requests for a hearing were due to the Department by April
6, 2026. The Department received written comments from Mr. Larry
Dembrun, SIFMA, and UBS, and no requests for a public hearing.\4\
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\4\ All information submitted by the Applicant to the Department
in connection with this exemption is available through the
Department's Public Disclosure Room, by referencing D-12118.
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Comment From Mr. Larry Dembrun
Mr. Dembrun stated that he ``understood the intent behind the
[regulation]'' and ``encourage[d] decision-makers to carefully consider
how its implementation may affect communities that are already facing
financial and operational challenges.'' He also asked the Department to
engage a broad range of stakeholders and to incorporate their feedback
before finalizing the exemption.
Department Response: The implementation of this exemption allows
UBS QPAMs to continue to rely on PTE 84-14 to engage in a wide range of
transactions that are beneficial to Covered Plans, notwithstanding that
the UBS QPAMs fail to comply with Section I(g) of that class exemption.
This exemption, therefore, preserves the ability of Covered Plans to
retain their asset manager of choice and potentially avoid the
financial and operational challenges associated with transitioning
their assets to a new asset manager. These costs are described in the
Proposed Exemption. Further, by permitting UBS QPAMs to continue to
rely on PTE 84-14, this exemption allows UBS QPAMs to manage Covered
Plan assets more efficiently.
With respect to Mr. Dembrun's request that the Department engage a
broad range of stakeholders, the Department notes that UBS provided a
notice of the Proposed Exemption to all UBS Covered Plan clients and
notice of the Proposed Exemption was published in the Federal Register.
In developing administrative exemptions, the Department welcomes and
considers carefully comments from stakeholders, which become part of
the public record.
Comment From SIFMA
SIFMA raised general concerns regarding the impact of PTE 84-14's
disqualification provisions. SIFMA also broadly stated that the
individual exemptions issued as a result of UBS QPAM disqualification
contain punitive
[[Page 24011]]
conditions that cannot be squared with ERISA or the interests of
participants and beneficiaries. With regard to UBS specifically, SIFMA
asked the Department to issue an exemption with conditions that are
more tailored and limited.
Department Response: While SIFMA did not articulate which
conditions in the Proposed Exemption are punitive, the Department has
nevertheless modified the terms of this exemption, as described below,
based on the Department's review of the entire record, including UBS's
comments to the Proposed Exemption.
Comments From UBS
UBS commented that the exemption continues to be in the interest of
Covered Plans and their participants and beneficiaries, because it puts
Covered Plans on equal footing with other investors and helps asset
managers by letting them avoid time-consuming compliance checks to
avoid transactions with parties in interest. UBS also made several
requests regarding the conditions of the Proposed Exemption that are
discussed below:
UBS Request 1--No conditions or a streamlined exemption. UBS argues
that the Department should grant UBS an exemption without any
conditions, because the conditions imposed by the Department: are
burdensome; have no appreciable benefit to plans; and have not
demonstrably increased protections or benefits for Covered Plans and
their participants and beneficiaries. UBS states that, as an
alternative, a smaller suite of ``streamlined conditions, modeled on
the 2012 Citigroup exemption, would be more than sufficient to
safeguard plans and their participants and beneficiaries.'' Finally,
UBS suggests that the transactions covered by PTE 84-14 do not present
a genuine risk of material conflicts, thus the Department should not
impose the same number or nature of conditions that are included in the
Proposed Exemption (Section I of PTE 84-14 applies only to party-in-
interest transactions executed by an independent asset manager and does
not apply to transactions between the plan and the QPAM itself).
Department's Response: While UBS did not demonstrate that removing
all of the conditions described in the Proposed Exemption would be
protective of or in the interests of affected Covered Plans and their
participants and beneficiaries, the Department has nevertheless
modified the terms of this exemption based on the Department's review
of the entire record, including UBS's comments. Under ERISA Section
408(a), Congress authorized the Department to issue a ``conditional or
unconditional exemption of any fiduciary or transaction'' only if the
exemption is: (1) administratively feasible for the Department; (2) in
the interests of the plan and of its participants and beneficiaries;
and (3) protective of the rights of participants and beneficiaries. The
conditions in this exemption are intended to ensure that UBS QPAMs
adhere to their statutorily required fiduciary obligations under ERISA
and that asset management decisions are effected without any intrusion
from UBS corporate or business decision-making. In the Department's
view, conditions requiring maintenance and adherence to Policies;
specialized QPAM training; checks on UBS QPAM compliance; and provision
of information to Covered Plans so that fiduciaries can make prudent
decisions regarding their retention of UBS QPAMs are protective of the
rights of the participants and beneficiaries of Covered Plans. The
conditions in this exemption help to further empower Covered Plan
fiduciaries to make prudent fiduciary decisions, by requiring UBS to
indemnify Covered Plans for any actual losses resulting directly from,
among other things, a violation of the conditions of this exemption.
The indemnification and hold harmless conditions permit Covered Plan
fiduciaries to exercise prudence when deciding to retain a new manager,
without fear of incurring substantial charges, lock-ups, or other
disincentives that could otherwise impair their ability to exercise
prudence.
Finally, the fact that Section I of PTE 84-14 applies to party in
interest transactions is irrelevant to the Department's decision to
impose conditions on the UBS QPAMs that rely on this exemption. The
Department notes that: (1) the scope of Section I of the exemptive
relief in the QPAM Class Exemption is expansive, permitting an
investment fund managed by a UBS QPAM to engage in all prohibited
transactions described in ERISA Section 406(a) with virtually all
parties in interest to Covered Plans that invest in the fund (except
the QPAM).\5\ The Department is guided by the policy objectives
expressed in the preamble to PTE 84-14 which state that the purpose of
Section I(g) is: to ensure that QPAMs, and those who may be in a
position to influence their policies, will maintain a high standard of
integrity.\6\ This objective is reinforced by Section I(g) of PTE 84-
14, which UBS QPAMs have failed to comply with numerous times. Given
the nature and number of these failures, the Department continues to
believe the conditions of this exemption are warranted.
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\5\ In addition, PTE 84-14 contains limited relief from ERISA
Section 406(b).
\6\ Proposed Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers, 47
FR 56945, 56947 (Dec. 21, 1982).
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UBS Request 2--The conditions are unfair to UBS QPAMs. UBS states
that: none of the disqualifying events had anything to do with UBS's
management of ERISA assets; there is no reason to question UBS's track
record of ERISA compliance; the Proposed Exemption conditions penalize
UBS for acquiring Credit Suisse at the Swiss government's behest, and
the Department is imposing an unnecessary regulatory regime on UBS due
to the historic misconduct of Credit Suisse. UBS also states that the
conduct relating to the conviction of CSSAG occurred prior to UBS's
acquisition of Credit Suisse, and during the post-merger integration
period, UBS proactively identified and voluntarily disclosed to the
government potentially problematic Credit Suisse accounts.
Department's Response: The conditions of this exemption are not
intended to punish UBS or unfairly burden UBS QPAMs. Instead, the
Department's objectives in granting this exemption are to (i) insulate
UBS QPAMs from the business and corporate decision making of UBS and
its affiliates and any Criminal Misconduct or potential future
misconduct of UBS and its affiliates; (ii) allow Covered Plans to
terminate their relationship with the UBS QPAMs with minimal disruption
to the Covered Plans; (iii) create a reliable and independent public
record that documents the UBS QPAMs' level of compliance with the terms
of this exemption and adherence to their basic fiduciary duties; and
(iv) provide the Department with the flexibility to revise or revoke
the relief in this exemption in a manner most protective of Covered
Plans, if UBS engages in future criminal activity.
Finally, regarding UBS's comments relating to post-merger activity
to remedy legacy problematic Credit Suisse accounts, the Department has
taken this information into consideration when determining to modify
certain terms of the exemption, as discussed below.
UBS Request 3--Section I(g) and the conditions of this exemption
are inconsistent with ERISA. UBS argues that the PTE 84-14
disqualification
[[Page 24012]]
provisions and the conditional individual exemptions required by
convicted managers go beyond ERISA's Congressional intent or are
otherwise not consistent with ERISA, which ``itself provides a clear,
fair process for disqualifying fiduciaries under 29 U.S.C. 1111(a).''
\7\
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\7\ UBS's comment letter also argues that the application of
Section I(g) to convictions by foreign courts is unjustifiable. The
Department declines to respond to this argument because whether
Section I(g) is properly applicable to convictions in foreign courts
is outside the scope of this exemption. The conviction necessitating
relief under this exemption occurred in the U.S. District Court for
the Eastern District of Virginia.
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Department's Response: UBS's general concerns regarding Section
I(g) of class PTE 84-14 are outside the scope of this individual
exemption. However, in the context of this individual exemption, the
text of ERISA explicitly authorizes the Department to grant conditional
exemptions from all or part of the restrictions imposed by ERISA
sections 406 and 407.\8\ The Applicant's comparison to ERISA section
411 is inapt because ERISA section 411 provides a mechanism to a bar an
entity from acting as a fiduciary--but Section I(g) does not bar an
entity from acting as a fiduciary. Nor are this exemption and its
conditions a process for qualifying or disqualifying any entity from
acting as a fiduciary. This individual exemption merely permits UBS
QPAMs to continue to rely on PTE 84-14 to engage in party-in-interest
transactions that would otherwise be prohibited under ERISA. Other
exemptive relief for many of those same transactions already exists.
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\8\ 29 U.S.C. 1108(a).
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To illustrate this point, the Department notes that, during the
period beginning on June 12, 2023 through June 11, 2024, the UBS QPAMs
were not permitted to use the relief in PTE 84-14, but they were
nevertheless able to act as investment-management fiduciaries for their
Covered Plan clients.\9\ In fact, UBS represented that during that
period of time, the UBS QPAMs were able to rely on alternative sources
of exemptive relief or avoid altogether engaging in prohibited
transactions on behalf of their Covered Plan clients.
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\9\ See PTE 2025-03, at 90 FR 3929, 3932 (January 15, 2025).
Further, UBS QPAMs would not have been able to rely on PTE 84-14
until January 15, 2025, when relief was granted retroactively to
June 12, 2023.
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UBS Request 4--Not administratively feasible. UBS argues that the
conditions described in the Proposed Exemption are not
``administratively feasible'' within the meaning of ERISA Section
408(a) and should be removed.
Department's Response: The Department notes that the conditions in
this exemption were developed with due consideration of whether the
exemption would be administratively feasible for the Department. Nearly
all of the exemption conditions, such as the requirement that UBS QPAMs
must undergo independent audits, develop policies and procedures, and
implement regular training, are largely self-executing and do not pose
an unreasonable burden to the Department.
UBS Request 5--No annual audits. UBS asserts that the exemption
should not require UBS to undergo an annual audit, because audits are
time consuming and expensive, and no UBS audit in over a decade has
uncovered a material compliance deficiency, i.e., they have been
``clean.'' Alternatively, UBS asserts that they should be treated the
same as in the recently proposed exemption for Goldman Sachs, which
would require a single external closing audit ``to cover the final
twelve months of exemptive relief,'' as opposed to annual external
audits.\10\
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\10\ Proposed Exemption for The Goldman Sachs Group, Inc. at 91
FR 16745, 16752 (April 2, 2026), Section III(i)(1).
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Department's Response: After reviewing the entire record, including
UBS's comments, the Department has determined to modify the audit
requirement described in the Proposed Exemption. The Department notes
that UBS QPAMs have been subject to numerous annual exemption audits,
and these audits have demonstrated a sufficient level of compliance for
the Department to require two audits over the remaining nine-year term
of this exemption. The Department notes that: notwithstanding the
missed audit period described in PTE 2025-03, UBS QPAMs' audits have
found the UBS QPAMs adhered to their basic fiduciary duties and operate
separately and without influence from UBS's businesses and corporate
activities; and UBS QPAMs' last violation of Section I(g) was due to
behavior that, at the time, was outside UBS's corporate umbrella (and
with respect to which UBS has made efforts to remedy).
The first audit must cover the consecutive twelve-month period from
May 5, 2029, through May 4, 2030, and be completed by November 4, 2030.
The second audit must cover the twelve-month period from May 5, 2034,
through May 5, 2035, and be completed by November 5, 2035.\11\ These
two independent audits help protect Covered Plans by ensuring that,
among other things: the QPAMs adhere to their basic fiduciary
obligations under ERISA; transactions prohibited under ERISA are
implemented in accordance with the requirements of PTE 84-14 and are
monitored in a way that protects participants; and the UBS QPAMs
implement their policies and training in accord with the requirements
of the exemption and report and remedy instances of noncompliance. The
audit requirement not only helps to ascertain instances of
noncompliance with this exemption but also helps promote and encourage
an ongoing culture of compliance for personnel subject to the audit.
The audit requirement itself may be partly responsible for
incentivizing compliant behavior by UBS QPAMs, and the absence of
discovery upon audit of a ``material compliance deficiency,'' in and of
itself, should not be grounds to remove this protective condition.
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\11\ This modification to the audit requirement renders the
``auditor consultation'' provision in Section III(i)(15)
meaningless, and so that provision has been deleted.
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UBS Request 6--No indemnification/hold harmless requirements or
written indemnification procedures. UBS should not be required to
indemnify plan clients for losses (condition Section III(j)(2)) or
maintain written indemnification procedures (condition Section III(v)
of the Proposed xemption and redesignated as Section III(u) in this
final exemption). Among other things, UBS states that these provisions
increase the costs for Covered Plans. UBS also asserts that the
indemnification provision ``exceeds the Department's lawful authority
because it purports to create a private right of action that Congress
did not provide for in ERISA.'' \12\
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\12\ Chamber of Com. of U.S.A. v. Dep't of Labor, 885 F.3d 360,
384 (5th Cir. 2018).
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Department's Response: The Department is unable to find that
removing the requirement to indemnify plan clients for losses or
maintain written indemnification procedures would be in the interests
of, and protective of, Covered Plans and their participants and
beneficiaries. The indemnification requirements permit fiduciaries of
Covered Plans to exercise their duties of prudence to determine whether
to seek an alternative investment manager without the imposition of
certain fees or charges. UBS has not provided any data demonstrating
that the indemnification provisions have increased costs for Covered
Plans due to the risk of indemnification being included in QPAM's
pricing of its services, and the Department is not persuaded that the
mere suggestion of such additional costs is grounds to remove the
condition.
[[Page 24013]]
UBS's comment letter does not support its assertion that the
indemnification requirements set forth in Section III(j)(2) and Section
III(u) in this final exemption exceed the Department's authority. The
Department notes that the text of ERISA explicitly authorizes the
Department to grant conditional exemptions from all or part of the
restrictions imposed by ERISA sections 406 and 407.
UBS Request 7--No Violation Notices. UBS argues that UBS QPAMs
should not be required to disseminate a violation notice as required in
Section III(t) (Violation Notice) in instances of a UBS QPAM's material
noncompliance with a condition of the exemption, because it is unclear
what types of noncompliance would be considered ``material.'' Further,
requiring UBS QPAMs to inform plan clients that a violation has
occurred threatens UBS QPAMs' status before the Department has
confirmed it is warranted. UBS also states that the notification
process would require significant time and expense.
Department's response: The Department is unable to find that the
requested change would be in the interest of Covered Plans. The
Department added the Violation Notice requirement to UBS's most recent
exemption (PTE 2025-03) as a protective measure because UBS failed to
complete an audit required by their previous exemption (PTE 2024-14).
The Department added this condition to ensure that Covered Plan
fiduciaries receive the information that they need to make informed
prudent decisions about the asset manager to whom they have entrusted
asset management responsibilities.
Regarding UBS's concern about whether an instance of noncompliance
is ``material,'' as the Department noted in PTE 2025-03, ``each
condition in an exemption is material to the Department's findings and
must be adhered to in order for an ERISA-covered plan, IRA, a party in
interest, or disqualified person to rely on the exemption.'' Thus,
failure to adhere to a condition of this exemption should be considered
material noncompliance.\13\ The Department notes further the language
from paragraph 44 of the Proposed Exemption:
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\13\ In the Department's view, examples of non-material
violations of conditions may include minor errors in the timing of
mailings not specifically required under the condition, spelling
mistakes that do not alter the meaning of required notices,
scrivener's errors, and similar clerical errors that do not violate
a condition by its terms.
When interpreting and implementing this exemption, UBS and the
relevant QPAM should resolve any ambiguities considering the
exemption's protective purposes in favor of the exemption's
protective purposes. To the extent additional clarification is
necessary, these persons or entities should contact EBSA's Office of
Exemption Determinations by email (<a href="/cdn-cgi/l/email-protection#30551d5f555470545f5c1e575f46"><span class="__cf_email__" data-cfemail="8ce9a1e3e9e8cce8e3e0a2ebe3fa">[email protected]</span></a>) or phone (202-693-
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8540).
Therefore, UBS QPAMs are encouraged to determine materiality of
noncompliance in accordance with the above. The Department suggests
that UBS QPAM contact the Department to discuss the potential
noncompliance early in the 30-day period preceding the date by which
the QPAM is required to send out the Violation Notice.
UBS Request 8--Broader condition III(s). Section III(s) of the
Proposed Exemption provides that a UBS QPAM will not fail to meet the
terms of this exemption solely because a different UBS QPAM fails to
satisfy select conditions for relief in Section III (i.e. Section
III(c), (d), (h), (i), (j), (k), (1), (m), (p), (r), or (v)). UBS
asserts that Section III(s) should be expanded to apply to all Section
III's conditions. Alternatively, at a minimum, Section III(t)
(Violation Notice), of the Proposed Exemption should be included in the
specific subsections for which Section III(s) applies.
Department's response: Except as discussed below, the Department is
unable to find that a sweeping change to Section III(s) of the Proposed
Exemption would be in the interest of and protective of Covered Plans.
Section III(s), redesignated as Section III(r) in this final exemption,
is tailored to strike the appropriate balance between: preserving a UBS
QPAM's relief notwithstanding that a different UBS QPAM is not in
compliance with certain conditions of the exemption; and demanding
accountability from all UBS QPAMs with respect to certain other
conditions of the exemption. Notwithstanding this, the Department
agrees that an Affiliated QPAM should not, by default, fail to meet the
terms of the exemption solely because a different Affiliated QPAM
failed to comply with the Violation Notice requirement set forth in
Section III(t) of the Proposed Exemption (redesignated as Section
III(s) in this final exemption). As a result, Section III(r) is revised
to include Section III(s).
UBS Request 9--Additional exemptive relief from foreign convictions
and reporting of foreign non-prosecution agreements or deferred
prosecution agreements. UBS argues that the exemption should cover any
future foreign conviction of a UBS affiliate. Further, the exemption
should not require UBS to notify the Department of foreign equivalents
of deferred prosecution agreements and non-prosecution agreements.\14\
According to UBS, this change would obviate the need to evaluate
whether an anticipated foreign conviction is ``substantially
equivalent'' to a disqualifying U.S. crime and would reduce the
materials the Department must review, with no adverse effect on Covered
Plans or their participants or beneficiaries.
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\14\ UBS appears to be requesting that the Department permit UBS
QPAMs to forgo future compliance with the current conditions of PTE
84-14, Sections I(g)(2), and VI(r)(2), as they relate to foreign
conviction(s) and foreign settlements that are substantially
equivalent to a non-prosecution agreement (NPA) or deferred
prosecution agreement (DPA) with U.S. prosecutors that would form
the basis of a violation of Section I(g).
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Department's response: The Department is unable to find that pre-
emptively providing an exemption for future criminal behavior or
foreign equivalents of deferred prosecution agreements and non-
prosecution agreements by UBS QPAMs, their affiliates, or any entity
owned 5% or more by a UBS QPAM, would be in the interest of Covered
Plans. In this regard, the Department is able to make prospective
findings that the built-in protections contained herein are sufficient
to protect Covered Plans. UBS has not demonstrated that the conditions
of this exemption would sufficiently protect Covered Plans with respect
to all future foreign convictions of UBS affiliates about which no
facts are yet available.
If a future crime raises ``substantial equivalency'' concerns, UBS
may seek the Department's views in this regard. Additionally, the One-
Year Transition Period under the QPAM Class Exemption, and the ability
to apply for a new individual exemption, provide UBS QPAMs with the
time and the opportunity to address any issues about whether an
upcoming foreign conviction implicates Section I(g) of PTE 84-14.
Notwithstanding the above, the Department has removed the condition in
Section III(q) from the exemption because it is made moot due to the
operation of Section I(g)(2) of PTE 84-14.
UBS Request 10--Ten-year exemption period. UBS requests that the
Department should grant relief for the entirety of the ten-year
disqualification period, instead of the five years specified in the
Proposed Exemption.
Department's response: After reviewing the record and the
conditions of this exemption, the Department has determined to make the
requested change. The Department believes
[[Page 24014]]
extending the effective period in this exemption would be sufficiently
protective of Covered Plans because: UBS QPAMs have satisfactorily
performed years of exemption-mandated training; UBS has voluntarily
made remedial efforts with respect to criminal behavior that occurred
outside its corporate umbrella; and the terms of this exemption
continue to require, among other things, annual ongoing compliance
reviews by two compliance officers. Moreover, the Department will
receive two audit reports from an independent auditor detailing the
QPAMs' efforts to comply with the terms of this exemption and with the
Policies and Training requirements after each twelve-month audit
period. The Department reserves the right to revoke this exemption in
accordance with its exemption procedure regulation, if those audit
reports demonstrate the UBS QPAMs' failure to adhere to the terms of
this exemption or their fundamental fiduciary obligations.
The complete application file (D-12118) 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 February 26, 2026, at 91 FR 9645.
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under ERISA section 408(a) and Code section 4975(c)(2) does not relieve
a fiduciary or other party in interest or disqualified person from
certain other provisions of ERISA and the Code, including any
prohibited transaction provisions to which the exemption does not apply
and the general fiduciary responsibility provisions of ERISA section
404, which, among other things, require a fiduciary to discharge their
duties respecting the plan solely in the interest of the participants
and beneficiaries of the plan and in a prudent fashion in accordance
with ERISA section 404(a)(1)(B); nor does it affect the requirement of
Code section 401(a) that the plan must operate for the exclusive
benefit of the employees of the employer maintaining the plan and their
beneficiaries;
(2) As required by ERISA section 408(a), the Department hereby
finds that the exemption is (1) administratively feasible for the
Department, (2) in the interests of affected plans and of their
participants and beneficiaries, and (3) protective of the rights of
participants and beneficiaries of such plans;
(3) The 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 of determining whether the transaction is in fact a
prohibited transaction; and
(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 UBS's exemption application, the Department grants the
following exemption under the authority of ERISA section 408(a) and
Code section 4975(c)(2) in accordance with the Department's exemption
procedures regulation.\15\
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\15\ 29 CFR part 2570, subpart B (89 FR 4662 (January 24,
2024)). Effective December 31, 1978, section 102 of Reorganization
Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the
authority of the Secretary of the Treasury to issue exemptions of
the type requested to the Secretary of Labor. Therefore, this
exemption is issued solely by the Department. For purposes of this
exemption, references to ERISA section 406, unless otherwise
specified, should be read to refer as well to the corresponding
provisions of Code section 4975.
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Exemption
Section I. Definitions
(a) Names of Certain Corporate Entities:
(1) The term ``CSAM LLC'' means Credit Suisse Asset Management,
LLC. On May 1, 2024, UBS merged CSAM LLC into UBS Asset Management
(Americas) LLC, with UBS Americas as the surviving entity.
(2) The term ``CSSEL'' means Credit Suisse Securities (Europe)
Limited, an indirect, wholly owned subsidiary of UBS Group AG.
(3) The term ``UBS'' means UBS AG, which is a wholly owned
subsidiary of UBS Group AG.
(4) The term ``UBS Americas'' means UBS Asset Management (Americas)
LLC, which is majority owned by UBS Americas, Inc., a wholly owned
subsidiary of UBS AG.
(5) The term ``UBS Europe'' means UBS Europe SE. UBS Europe is the
successor to UBS (France) S.A., which was a wholly owned subsidiary of
UBS under the laws of France until 2023. In July of 2023, UBS (France)
S.A. merged into UBS Europe and set up a branch in France called UBS
Europe SE, France Branch.
(6) The term ``CSSAG'' means Credit Suisse Services AG, which was
100% owned by Credit Suisse Group AG, before UBS AG acquired Credit
Suisse Group AG.
(b) The term ``Affiliated QPAM'' means UBS Americas, 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 ``Criminal Activity'' means the Covered Convictions
and the 2025 NPA.
(d) The term ``Covered Convictions'' means (1) the judgment of
conviction against CSSAG for one count of conspiracy to commit offenses
against the United States, in violations of Title 26, United States
Code, Section 7206(2), for the aiding, assisting, procuring,
counseling, and advising of the preparation and presentation of false
income tax returns to the Internal Revenue Service (the IRS), in
violation of Title 18, United States Code, Section 371 (the 2025 CSSAG
Conviction); (2) the judgment of conviction against CSSEL in Case
Number 1:21-cr-00520-WFK (the 2022 CSSEL Conviction); (3) the judgment
of conviction against UBS in case number 3:15-cr-00076-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 UBS's submission of Yen London Interbank Offered
Rates and other benchmark interest rates between 2001 and 2010 (the
2017 Conviction); and (4) the judgment of conviction on February 20,
2019, against UBS and UBS Europe in case Number 1105592033 in the
French First Instance Court (the 2019 UBS Europe Conviction).
(e) 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 UBS affiliate) has expressly represented that
the manager qualifies as a QPAM or relies on PTE 84-14. A Covered Plan
does not
[[Page 24015]]
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.
(f) The term ``Exemption Period'' means the period beginning on May
5, 2026, and ending on May 5, 2035.
(g) The ``2025 NPA'' means the Non-Prosecution Agreement entered
into on May 5, 2025 between the U.S. Department of Justice and CSSAG
relating to, and contemporaneously with, the 2025 CSSAG Conviction,
based specifically on the conduct of CSSAG's Credit Suisse Singapore
branch assisting U.S. taxpayers in failing to comply with tax
obligations or in using their accounts to evade U.S. taxes and U.S.
reporting requirements.
(h) The term ``Misconduct Entity'' means any entity subject to one
of the Criminal Activities, i.e., UBS, UBS Europe (into which UBS
France was recently merged), CSSAG, and CSSEL.
(i) 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 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.
(j) 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.
(k) The term ``UBS Seconded Employee'' means, an individual
nominally employed by a Misconduct Entity who performs work on behalf
of a UBS QPAM; provided that such UBS QPAM is solely responsible for
the management and control of the employee's job activities performed
on behalf of such QPAM. Notwithstanding the preceding sentence, the UBS
QPAM must be solely responsible for the establishment of the employee's
job duties and terms of employment (including compensation, promotions,
and benefits); and must have supervisory responsibility with respect
to, among other things, the employee's performance, training, and
disciplinary actions.
(l) The term ``UBS QPAMs'' means, individually or collectively, the
Affiliated QPAMs and/or the Related QPAMs.
(m) The ``conduct'' of any person or entity that is the ``subject
of'' any misconduct refers to the misconduct by any UBS personnel that
is the basis of (or the subject of) any Criminal Activity.
(n) The term ``participate in'' when used to describe an individual
or entity's participation in the Criminal Activity refers not only to
active participation in the Criminal Activity but also includes an
individual or entity's knowledge or approval of the Criminal Activity,
without taking active steps to prohibit such conduct, such as reporting
the conduct to the individual's supervisors, and to the Board of
Directors.
Section II. Covered Transactions
The UBS QPAMs will not be precluded from relying on the exemptive
relief provided by Prohibited Transaction Exemption 84-14 (PTE 84-14)
\16\ during the Exemption Period, notwithstanding the Criminal
Activity, provided that the definitions in Section I and the conditions
in Section III are satisfied.
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\16\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430,
(Oct. 10, 1985), as amended at 70 FR 49305 (Aug. 23, 2005), as
amended at 75 FR 38837 (July 6, 2010), as amended at 89 FR 23090
(April 3, 2024), and as corrected at 89 FR 65779 (Aug. 13, 2024).
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Section III. Conditions
(a) The UBS QPAMs (including their officers, directors, agents
other than the Misconduct Entities, employees of such QPAMs, and UBS
Seconded Employees) did not know nor have reason to know of and did not
participate in the conduct underlying the Criminal Activity. Further,
any other party engaged on behalf of the UBS 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 Criminal
Activity.
(b) The UBS QPAMs (including their officers, directors, agents
other than the Misconduct Entities, employees of such QPAMs, and UBS
Seconded Employees) did not receive direct compensation, or knowingly
receive indirect compensation, in connection with the criminal conduct
that is the subject of the Criminal Activity. Further, any other party
engaged on behalf of the UBS 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 Activity;
(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 Criminal Activity;
(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 UBS (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 a UBS QPAM; or
(2) Services are provided by UBS Seconded Employees;
(e) Any failure of an Affiliated QPAM to satisfy Section I(g) of
PTE 84-14 arose solely from the Criminal Activity;
(f) A UBS QPAM did not exercise authority over the assets of any
ERISA-covered plan or IRA in a manner that it knew or should have known
would further the criminal conduct underlying the Criminal Activity; or
cause the UBS QPAM or its affiliates to directly or indirectly profit
from the criminal
[[Page 24016]]
conduct underlying the Criminal Activity;
(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 with respect to employee benefit plans
sponsored for its own employees or employees of an affiliate. 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). The Policies must require and must 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 from receiving publicly available
research and other widely available information 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 exemption, if
granted;
(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 UBS
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.\17\ The Training must:
---------------------------------------------------------------------------
\17\ The exemption does not preclude a UBS 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;
(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 Affiliated QPAM submits to two twelve-month audits
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 Affiliated QPAM's
compliance with, the Policies and Training described above in Section
(h). The audit requirement must be incorporated in the Policies.
(2) UBS shall provide the Department a copy of the engagement
agreement with the independent auditor within 15 days after its
execution. Within 45 days after executing the engagement agreement with
the independent auditor, and after consultation with the auditor, UBS
must finalize and provide the independent auditor a schedule for
completion of the audit. The schedule must include target dates for the
auditor to send initial information and document requests to UBS and
for UBS to respond to those requests. The Department's receipt and
incorporation of the engagement agreement into the record, with or
without comment, should not be taken as an indication that the
Department has approved of the engagement agreement;
(3) The first audit must cover the consecutive twelve-month period
from May 5, 2029, through May 4, 2030, and be completed by November 4,
2030. The second audit must cover the twelve-month period from May 5,
2034, through May 5, 2035, and be completed by November 5, 2035.
(4) 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 Affiliated
QPAM and, if applicable, UBS, must 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;
(5) The auditor's engagement must specifically require the auditor
to determine and include in each audit whether each Affiliated QPAM has
developed, implemented, maintained, and followed the Policies in
accordance with the conditions of this exemption, if granted, and has
developed and implemented the Training, as required herein;
(6) The auditor's engagement must specifically require the auditor
to test each Affiliated QPAM's operational compliance with the Policies
and Training. In this regard, the auditor must test, for each
Affiliated QPAM, a sample of such Affiliated QPAM's
[[Page 24017]]
transactions involving Covered Plans, sufficient in size and nature to
afford the auditor a reasonable basis to determine such Affiliated
QPAM's operational compliance with the Policies and Training;
(7) For the audit, on or before the end of the relevant period
described in Section III(i)(1) for completing the audit, the auditor
must issue a written report (the Audit Report) to UBS and the
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 Affiliated QPAMs. The Audit Report must
include the auditor's specific determinations regarding:
(i) The adequacy of each Affiliated QPAM's Policies and Training;
each 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 Affiliated QPAM's noncompliance with the
written Policies and Training described in Section III(h) above. The
Affiliated QPAM must promptly address any noncompliance and 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 Affiliated QPAM. Any action taken or the plan of action to
be taken by the respective Affiliated QPAM must be included in an
addendum to the Audit Report (such addendum must be completed prior to
the certification described in Section III(i)(7) below). In the event
such a plan of action to address the auditor's recommendation regarding
the adequacy of the Policies and Training is not completed by the time
of submission of the Audit Report, the following period's Audit Report
must state whether the plan was satisfactorily completed. Any
determination by the auditor that an 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 an
Affiliated QPAM has complied with the requirements under this
subparagraph must be based on evidence that each Affiliated 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 Officers, as
described in Section III(m) below, as the basis for the auditor's
conclusions in lieu of independent determinations and testing performed
by the auditor as required by Section III(i)(3) and (4) above; and
(ii) The adequacy of the Exemption Review described in Section
III(m);
(8) The auditor must notify the respective 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;
(9) With respect to the Audit Report, the General Counsel, or one
of the three most senior executive officers of the Affiliated QPAM to
which the Audit Report applies, must certify in writing, under penalty
of perjury, that the officer has reviewed the Audit Report and this
exemption; that, to the best of such officer's knowledge at the time,
such 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. 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;
(10) The Risk Committee of UBS's 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 Affiliated QPAM and must certify in
writing, under penalty of perjury, that such officer has reviewed the
Audit Report;
(11) Each Affiliated QPAM provides its certified Audit Report to
the Office of Exemption Determinations (OED) via email to e-
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="c788828387a3a8abe9a0a8b1">[email protected]</a>. 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 exemption. Furthermore,
each 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;
(12) 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;
(13) UBS must notify the Department of Labor's Office of Exemption
Determinations (OED) of the auditor selected to complete the audits
required by Section III(i)(1), six months prior to the start of each
audit period. 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;
(14) At the Department's request, UBS and the Auditor shall provide
the Department with updates about the progress of the audit. The
Department's requests may be directed to UBS and/or the auditor; and
(15) 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.
(j) As of the effective date of this 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 any conditions
of this exemption, 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 PTE 84-14 Section I(g), other
than a Covered Conviction. 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
[[Page 24018]]
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 PTE 84-14;
(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-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 damages arising from acts outside the control of the
Affiliated QPAM; and
(7) Within 120 days after the effective date of this exemption,
each QPAM must provide a notice of its obligations under this Section
III(j) to each Covered Plan. For prospective Covered Plans that enter
into a written asset or investment management agreement with a 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(j) 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 (j) within ten (10) business days
after receipt of the signed agreement.
(k) Within 60 days after the publication date of the notice of
final exemption in the Federal Register, 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
Criminal Activity (the Summary), which has been submitted to the
Department, and a prominently displayed statement (the Statement) that
the Criminal Activity results 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. The Summary must be
submitted to OED before it is distributed by each Affiliated QPAM. 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 Affiliated
QPAM. The notices may be delivered electronically (including by an
email that has a link to this exemption).
(l) 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 Criminal Activity. If,
during the Exemption Period, an entity within UBS's corporate structure
engages in conduct prohibited by Section I(g) of PTE 84-14 (other than
the Criminal Activity), relief in this exemption would terminate
immediately.
(m)(1) Within 60 days after the date of publication of the
exemption, each Affiliated QPAM must designate two senior Compliance
Officers (the Compliance Officers) who will be responsible for
compliance with the Policies and Training requirements described
herein. For purposes of this condition (m), each relevant line of
business within an Affiliated QPAM may designate its own two Compliance
Officers. Notwithstanding the above, the appointed Compliance Officers
must not be a person who: (i) participated in the criminal conduct
underlying the Criminal Activity, or knew of, or (ii) had reason to
know of, the Criminal Activity without taking active documented steps
to stop the misconduct.
(2) The Compliance Officers 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.
(3) With respect to the Compliance Officers, the following
conditions must be met:
(i) Each 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;
(ii) Each Compliance Officer must have a direct reporting line to
the highest-ranking corporate officer in charge of compliance for the
applicable Affiliated QPAM or the highest-ranking corporate officer in
charge of the applicable Affiliated QPAM; and
(iii) The Compliance Officers responsible for the Exemption Review
must provide the Exemption Report described in Section III(m)(4)(ii) to
the auditor within seven (7) days of completing the report.
(4) 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
[[Page 24019]]
Training and of the following: any compliance matter related to the
Policies or Training that was identified by, or reported to, the
Compliance Officers 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 2025-03; 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 Officers must prepare 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 changed processes or
systems, and management's actions on such recommendations;
(iii) In the Exemption Report, each 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 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 UBS, and the relevant Affiliated QPAM.
The Exemption Report must be made unconditionally available to the
independent auditor described in Section III(i) above; and
(v) The Exemption Review, including the Compliance Officers'
written annual Exemption Report, must cover the Exemption Period, and
the Exemption Review, including the Compliance Officers' written
Exemption Report, must be completed within three (3) months following
the end of the period to which it relates.
(n) UBS 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 Criminal Activity;
(o) Relief in this exemption will terminate on the date that is one
year following the date that a U.S. regulatory authority makes a final
decision that UBS or an affiliate of either failed to comply in all
material respects with any requirement imposed by such regulatory
authority in connection with the Criminal Activity.
(p) 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;
(q) 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 (the Summary Policies) which 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.\18\ 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.
---------------------------------------------------------------------------
\18\ If the UBS 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.
---------------------------------------------------------------------------
(r) An Affiliated QPAM will not fail to meet the terms of this
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), (p), (q), (s), or (u); or if the independent auditor
described in Section III(i) fails to comply with a provision of the
exemption other than the requirement described in Section III(i)(12),
provided that such failure did not result from any actions or inactions
of UBS or its affiliates;
(s) If the independent auditor or UBS or its affiliates learns of
any material noncompliance with a condition of this exemption, UBS must
send a notice (a Violation Notice) to all affected Covered Plans and
the Department that prominently and conspicuously states or describes:
(1) that UBS, or the UBS QPAM, as applicable, failed to meet the terms
of this exemption (and describes the failure); (2) the extent to which
UBS QPAMs have potentially been operating without an exemption due to
the failure; (3) whether UBS plans to apply for retroactive relief from
the Department for this failed condition; (4) any further transactions
engaged in by the UBS QPAMs on behalf of Covered Plans that may be non-
exempt prohibited transactions unless the Department grants retroactive
relief for the period in which the transactions occurred; and (5) UBS
must indemnify and hold harmless the Covered Plan for any actual losses
resulting directly from the QPAM's failure to comply with any
conditions of this exemption, ERISA's fiduciary duties and of the
prohibited transaction provisions of ERISA and the Code, 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 PTE 84-14 Section I(g), other than the
Criminal Activity. The Violation Notice must be sent to all affected
Covered Plans and the Department within 30 days after the independent
auditor becomes aware of the violation. If the Violation Notice is
inadvertently not sent within the 30-day period, the UBS QPAM may self-
correct the failure by sending the Violation Notice to all affected
Covered Plans and the Department with an addendum describing the
failure as soon as practicable upon discovery, but no later than 30
days after the completion of the next scheduled audit.
(t) All the material facts and representations set forth in the
Summary of Facts and Representations are true and accurate at all
times.
(u) Each UBS QPAM must maintain written processes that clearly
describe: (1) how the QPAM identifies and quantifies ``actual losses''
for purposes of Section III(j)(2); and (2) how Covered Plans may
recover or avoid incurring the losses that the UBS QPAM must indemnify
or hold Covered Plans harmless from incurring pursuant to Section
III(j)(2). Each UBS QPAM must develop these processes and deliver a
copy of the processes to each Covered Plan within 90 days after the
date the Department publishes a final exemption
[[Page 24020]]
in the Federal Register and notify Covered Plans of any subsequent
material changes to the processes within 30 days of the effective date
of such changes. QPAMs that have already satisfied this requirement in
PTE 2025-03 are deemed to have satisfied the same condition of this
exemption.
Exemption Date: This exemption will be in effect for the period
beginning on May 5, 2026, through May 5, 2035.
Signed at Washington, DC, this 30th day of April 2026.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2026-08625 Filed 5-1-26; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on May 4, 2026.
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