WASHINGTON (Legal Newsline) — The Securities and Exchange Commission announced Sept. 7 that State Street will pay more than $35 million to settle allegations of fraudulently charging secret markups for transition management services.

“Firms that run trading platforms cannot mislead subscribers about their order handling operations,” said Kathryn A. Pyszka, associate director of the SEC’s Chicago Regional Office.

According to allegations, State Street ran a scheme that overcharged transition management customers to generate roughly $20 million in improper revenue. When customers started to realize what was happening, State Street said the errors were “inadvertent commissions” or “fat finger errors.”

“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, director of the SEC’s Boston Regional Office that investigated the overcharges.

Handling the case for the SEC were Eric Heining, Rory Alex, Rua Kelly, and Paul Block of the Boston office with assistance from examiner Mark Gera. The SEC noted that the U.S. Attorney’s Office for the District of Massachusetts, Fraud Section of the U.S. Department of Justice, Federal Bureau of Investigation, United Kingdom’s Financial Conduct Authority, and the City of London Police assisted in the case.

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