The State Street Corporation set aside $618 million to cover legal claims related to losses from mortgage security investments after five clients sued it, the New York Times writes.
The clients said they lost tens of millions of dollars in State Street funds that they were told were be invested in low-risk debt like Treasuries and corporate bonds. The lawsuit asserts that
One fund lost 28% of its value during the summer credit crisis, according to the lawsuit.
“This is the first wave of these securities fraud suits,” said Gregory J. Hindy, a securities lawyer and partner at McCarter & English in
Also last week,
State Street, which manages $2 trillion for pension funds and other institutions, saw its shares surge after the announcements, closing at $85.37, a record for the company.