State Street Announces Settlement Agreement with Department of Justice & the United States Attorney for the District of Massa...
January 18 2017 - 10:07AM
Business Wire
State Street Corporation (NYSE: STT) today announced that it has
entered into a settlement agreement with the US Department of
Justice and United States Attorney for the District of
Massachusetts (DOJ) that resolves their investigation of the
Company concerning six EMEA-based (Europe, Middle-East and Africa)
clients that were overcharged for transition management services in
2010 and 2011. As previously disclosed, the Securities and Exchange
Commission (SEC) has been conducting its own investigation into
this matter. State Street is in discussions with the SEC Staff
regarding a resolution of the matter, and has reached an agreement
in principle with the Staff of the SEC to pay a penalty of $32.3
million (equal to the penalty being paid to the DOJ). Resolution of
the matter is subject to completion of negotiations with the SEC
Staff on the other terms of the settlement, followed by review and
consideration by the SEC.
After learning of this misconduct in 2011, State Street reported
this matter to the UK Financial Conduct Authority (FCA) and
cooperated with the FCA and other governmental agencies, while
simultaneously conducting its own internal investigation with the
assistance of independent advisors. State Street deeply regrets
this matter and accepts responsibility for the actions of its
former employees. The company fully reimbursed the six clients that
were impacted, terminated responsible employees, appointed new
executives to lead its transition management business, and
implemented new and stronger controls. State Street has previously
disclosed the investigation that is being resolved by this
settlement.
Over the past five years, State Street has significantly
strengthened its risk, compliance and controls infrastructure
including by:
- More than doubling its headcount in
compliance;
- Significantly increasing its investment
in compliance, audit and risk management; and
- Implementing firm-wide programs on
ethical decision making and encouraging employees at all levels to
speak up if they see something wrong, and to challenge decisions or
actions if they think they’re wrong.
Under the terms of the settlement with the DOJ, State Street
will, among other actions, pay a penalty of $32.3 million. A copy
of the deferred prosecution agreement, which includes a statement
of facts concerning the instances of overcharging, will be posted
to the Company’s website. As noted above, State Street intends to
reach a settlement with the SEC and has offered, among other
things, to pay a penalty of $32.3 million. The Company had
previously recorded a total accrual of $42 million regarding the
DOJ and SEC investigations in previously filed financial
statements, and it has recorded a total additional accrual of $23
million in the fourth quarter of 2016 with respect to the DOJ
settlement and potential SEC settlement. As previously disclosed,
State Street entered into a settlement with the FCA in 2014
concerning this conduct.
About State Street CorporationState 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 $29 trillion in assets under custody and
administration and $2 trillion* in assets under management as of
September 30, 2016, State Street operates in more than 100
geographic markets worldwide, including the US, Canada, Europe, the
Middle East and Asia. For more information, visit State Street’s
website at www.statestreet.com.
* Assets under management were $2.4 trillion as of September 30,
2016. AUM reflects approximately $40 billion (as of September 30,
2016) with respect to which State Street Global Markets, LLC (SSGM)
serves as marketing agent; SSGM and State Street Global Advisors
are affiliated.
Forward-Looking Statements
This news release contains forward-looking statements as defined
by United States securities laws, including statements relating to
our goals and expectations regarding our business, operations and
strategies and our discussions with the SEC Staff regarding
resolution of the SEC’s investigation referenced in this news
release. Forward-looking statements are often, but not always,
identified by such forward-looking terminology as "will," "goal,"
"objective," "intend," "plan," "forecast," "outlook," "believe,"
"anticipate," "estimate," "seek," "may," "trend," "target,"
"strategy" and "expect," or similar statements or variations of
such terms. These statements are not guarantees of future
performance, are inherently uncertain, are based on current
assumptions that are difficult to predict and involve a number of
risks and uncertainties. Therefore, actual outcomes and results may
differ materially from what is expressed in those statements, and
those statements should not be relied upon as representing our
expectations or beliefs as of any date subsequent to the date of
this news release. Important factors that may also affect future
results and outcomes include, but are not limited to: a resolution
of the SEC’s investigation referenced in this report on the terms
agreed upon with the Staff or otherwise is not final and is subject
to completion of negotiations with the SEC Staff on the other terms
of the settlement, followed by review and consideration by the SEC,
and the terms of any such settlement, including, without
limitation, the amount of the related penalty, remain subject to
change. Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in our 2015 Annual Report on Form 10-K and
our subsequent SEC filings. We encourage investors to read these
filings, particularly the sections on risk factors, for additional
information with respect to any forward-looking statements and
prior to making any investment decision. The forward-looking
statements contained in this news release speak only as of the date
hereof, and we do not undertake efforts to revise those
forward-looking statements to reflect events after that date.
(C) 2016 State Street Corporation - All Rights Reserved
The whole or any part of this work may not be reproduced, copied
or transmitted or any of its contents disclosed to third parties
without State Street express written consent.
State Street Corporation, One Lincoln Street, Boston, MA
02111-2900
CORP-2574
Expiring date: 01/31/2019
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version on businesswire.com: http://www.businesswire.com/news/home/20170118005822/en/
State Street CorporationMedia Contacts:Anne
McNally, +1 617-664-8576aemcnally@statestreet.comorCarolyn Cichon,
+1 617-664-8672ccichon@statestreet.comorInvestor
Contact:Anthony Ostler, +1
617-664-9797agostler@statestreet.com
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