Class action firm may join AG Brown's cause

John O'Brien Nov. 2, 2009, 5:28pm


WASHINGTON (Legal Newsline) - A prominent Washington law firm is considering following in California Attorney General Jerry Brown's footsteps by filing a lawsuit against State Street Bank & Trust.

Cohen Milstein says it is investigating the actions of State Street, a major service provider to institutional investors. In a suit unsealed last month, Brown claims the company committed fraud against two state retirement systems and is seeking $200 million in penalties and overcharges for executing foreign currency trades since 2001.

Cohen Milstein says it is investigating whether the trades violated federal law.

"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Brown said. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."

Brown's office estimates that the Boston-based bank overcharged the pension funds by more than $56.6 million over eight years.

Cohen Milstein, which recently hired former District of Columbia Attorney General Linda Singer, wants to know if the company violated the Employee Retirement Income Securities Act of 1974, which governs State Street's conduct as a fiduciary of ERISA-covered pension plans.

State Street executed foreign exchange transactions requested early in the day at the rate available, then watched market fluctuation over the course of the day in order to charge their clients a different rate and pocketed the difference, Brown alleges.

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