State Street Corp (STT.N) will pay more than $35 million to settle U.S. charges that it fraudulently charged secret mark-ups for transition management services and hid details from clients about the trading of U.S. Treasury securities, the U.S. Securities and Exchange Commission said on Thursday.
The figure includes $32.3 million that State Street had previously agreed to pay to the SEC to settle fraud charges for the secret mark-ups. State Street also entered into a deferred prosecution agreement with U.S. Justice Department officials over the matter in January, and agreed to pay the agency an equal amount.
State Street has since shuttered some offices in its transition management business, which helps international customers move investments between asset managers or liquidate large portfolios.
In addition, the SEC said in a statement that State Street agreed to pay a $3 million penalty, without admitting or denying findings that its disclosure failures related to its GovEx government securities trading platform violated the law.
State Street had previously disclosed it had reached an agreement in principle to pay the $3 million penalty.
In a statement e-mailed by a spokeswoman, State Street said its settlement with the SEC ends all government investigations of the overcharging for its transition management services, which the SEC said generated about $20 million in improper revenue for the firm.
“We deeply regret that our clients were impacted and that a small number of our employees failed to meet our expectations. The impacted clients were fully reimbursed and over the past several years we have taken significant steps to strengthen our controls for our transition management business, and more broadly to enhance our compliance program, culture and operating environment,” State Street said.
REUTERS
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