DOW JONES NEWSWIRES
State Street Corp. (STT) added $250 million to its legal reserve
to address legal exposure related to losses by investors in some
strategies managed by State Street Global Advisors.
The company also announced it recently entered into a proposed
$89.8 million deal involving a lawsuit seeking class-action status
regarding investors in active fixed income funds. The agreement is
subject to court approval.
The reserve increase cut the money manager's previously reported
third-quarter earnings to $327 million, or 66 cents a share, from
$516 million, or $1.04 a share. State Street said the reserve,
which now totals $443 million, should cover the potential
resolution of proceedings by the Securities and Exchange Commission
and other government authorities as well as the lawsuit.
Meanwhile, California lodged a suit against State Street on Oct.
20, claiming the bank secretly overcharged both the state's
retirement system, Calpers, and the state's teachers' retirement
system by more than $56 million in currencies trades since 2001.
State Street has denied any wrongdoing and said it will defend
itself against any litigation.
State Street shares closed Thursday at $42.81 and were inactive
premarket. The stock is up 8.9% this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com;