State Street Corp. announced Thursday it has entered into settlements with the Securities and Exchange Commission, the Massachusetts Attorney General and the Massachusetts Securities Division of the Office of the Secretary of State to resolve investigations into losses made around certain active fixed-income strategies managed by State Street Global Advisors.
Under the terms of the agreement with the SEC, State Street [STT] 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 Massachusetts, State Street has agreed to pay $10 million each to the Massachusetts Secretary of State and the Massachusetts Attorney General.
A spokesman for Boston-based State Street said that its previously established legal reserve will cover the cost of the settlements.
In reaching these settlements, which surround investments made prior to 2007, State Street has not admitted or denied the allegations made by the regulators.
“We value our reputation as a trusted fiduciary to institutions around the world and we recognize the critical importance of fulfilling our fiduciary obligations,” said Ronald E. Logue, State Street’s chairman and chief executive officer. “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.”
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access