State Street to pay millions in fines to SEC, Justice Deptartment

State Street to pay millions in fines to SEC, Justice Deptartment
© Getty Images

A major Boston-based bank will pay millions to settle federal charges that it skimmed profits on foreign currency exchanges for its clients.

ADVERTISEMENT

State Street Bank will pay at least $382 million to the Department of Justice, Securities and Exchange Commission (SEC) and Department of Labor, the agencies announced Tuesday. 

“Matters of this nature can drain both time and resources; so where possible and appropriate we feel it is in State Street’s and our clients’ best interests to pursue settlements,” said Mike Rogers, president and chief operating officer of State Street.

State Street had allegedly deceived and profited off of clients by pricing foreign currency exchanges outside of competitive rates without telling them, according to the agencies. That allowed State Street take in profits from marked-up or marked-down trades.

“State Street’s custody clients, many of whom were public pension funds, financial institutions and non-profit organizations, had a right to expect that State Street would execute transactions in an honest and forthright manner,” said Carmen Ortiz, U.S attorney for Massachusetts. “Instead, State Street executed FX transactions in a manner that enabled it to reap substantial profits at the expense of its custody clients. Today’s settlement reflects a significant and appropriate penalty for State Street’s deceptive conduct."

State Street will pay $155 million and $167.4 million in penalties to the Justice Department and SEC, respectively. The bank will also pay $60 million to retirement fund clients covered by Labor Department regulations.

“When financial institutions charged with safeguarding retirement plan assets put the firm’s interests ahead of the best interest of their plan clients, or fail to candidly disclose fees, we will hold them accountable,” Labor Secretary Thomas PerezThomas Edward PerezClinton’s top five vice presidential picks Government social programs: Triumph of hope over evidence Labor’s 'wasteful spending and mismanagement” at Workers’ Comp MORE said. “Retirement security is a pillar of middle class life, and the Labor Department and our federal partners are committed to using our authority to protect it.”