STT State Street Corporation

State Street Corp. has agreed to pay $12 million to settle charges that a senior vice president and a hired lobbyist allegedly offered an Ohio deputy treasurer payoffs in order to win contracts servicing state pension funds.

An investigation by the Securities and Exchange Commission found that Vincent DeBaggis, formerly State Street's senior vice president of public fund servicing team, entered into an agreement with Amer Ahmad, then Ohio deputy treasurer, to make illegal cash payments and political campaign contributions. In exchange Mr. Ahmad helped the Boston-based bank obtain three lucrative contracts.

Mr. DeBaggis agreed to settle the SEC's charges by paying $174,202.81 in disgorgement and prejudgment interest and a $100,000 penalty.

State Street and Mr. DeBaggis consented to the SEC's orders without admitting or denying the findings. A call seeking comment from State Street wasn't immediately returned.

The Ivy League-educated Mr. Ahmad, who served under two treasurers in Ohio before becoming comptroller in Chicago, pleaded guilty in 2013 to bribery and conspiracy charges before fleeing to Pakistan, according to court documents. He was eventually returned to the U.S. to serve a 15-year sentence.

"Pension fund contracts cannot be obtained on the basis of illicit political contributions and improper payoffs," said Andrew J. Ceresney, director of the SEC's enforcement division. "DeBaggis corruptly influenced the steering of pension fund custody contracts to State Street through bribes and campaign donations."

Additionally, the SEC alleged that Robert Crowe, a lawyer hired as a fundraiser and lobbyist by State Street, took part in the kickback scheme, which took place from 2010 to 2011.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

January 14, 2016 14:55 ET (19:55 GMT)

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