State Street Enters into Settlements with Regulatory Authorities to Resolve Inquiry into Losses by Certain Active SSGA Fixed-...
February 04 2010 - 11:51AM
Business Wire
State Street Corporation (NYSE: STT) today announced that it has
entered into settlements with the Securities and Exchange
Commission (SEC), the Massachusetts Attorney General and the
Massachusetts Securities Division of the Office of the Secretary of
State to resolve their investigations into losses incurred by and
disclosures made around certain active fixed-income strategies
managed by State Street Global Advisors (SSgA) during 2007 and
earlier periods. In reaching these settlements, State Street has
not admitted or denied the allegations made by the regulators.
Under the terms of the agreement with the SEC, State Street has
agreed to establish a $313 million fair fund, which includes a fine
of $50 million and disgorgement of advisory fees and interest of
approximately $8 million. Combined with the approximately $350
million in prior client settlements, the total compensation to
investors will be approximately $663 million. The allocation of the
payments from the fair fund to former investors in the active
fixed-income funds has been agreed upon with the SEC. Under the
settlements with the Commonwealth of Massachusetts, State Street
has agreed to pay $10 million to each of the Massachusetts
Secretary of State and the Massachusetts Attorney General. State
Street’s previously established legal reserve will fully cover the
cost of the settlements.
Ronald E. Logue, State Street’s chairman and chief executive
officer said, “We value our reputation as a trusted fiduciary to
institutions around the world and we recognize the critical
importance of fulfilling our fiduciary obligations. As such, we
were determined to work with our regulators and with our customers
to resolve their concerns around investments in certain of SSgA’s
active fixed-income strategies in 2007. We remain committed to
building on SSgA’s comprehensive organizational and infrastructure
changes implemented over the past 24 months to ensure that our
practices not only meet but exceed industry standards.”
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors
including investment servicing, investment management and
investment research and trading. With $18.8 trillion in assets
under custody and administration and $1.9 trillion in assets under
management at December 31, 2009, State Street operates in 25
countries and more than 100 geographic markets worldwide. For more
information, visit State Street’s web site at
www.statestreet.com.
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