BOSTON (Legal Newsline) — U.S. Attorney Carmen M. Ortiz for
the District of Massachusetts, director Andrew J. Ceresney of the Division of
Enforcement for the Securities and Exchange Commission (SEC) and U.S. Labor Secretary
Thomas E. Perez have announced that State
Street Bank and Trust Company will pay $382.4 million after allegations it
deceived clients when giving indirect foreign currency exchange (FX) services.
“State Street’s custody clients, many of whom were public
pension funds, financial institutions and non-profit organizations, had a right
to expect that State Street would execute transactions in an honest and
forthright manner,” Ortiz said.
“Instead, State Street executed FX transactions in a manner that enabled
it to reap substantial profits at the expense of its custody clients. Today’s settlement reflects a significant and
appropriate penalty for State Street’s deceptive conduct.”
State Street allegedly did not price its transactions at
prevailing interbank market rates but, instead, built in predetermined markups.
Of its $382.4 million settlement, the Justice Department will receive $155
million, the SEC will receive $167.4 million in disgorgement and penalties and
ERISA plan clients will receive at least $60 million.
“State Street misled custody clients about how it priced
their trades and tucked its hidden markups into a corner where they were
unlikely to notice,” Ceresney said.
“Financial institutions cannot mislead their customers about their
Organizations in this Story
U.S. Securities and Exchange Commission
100 F Street Northwest
Washington, DC 20001
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