What’s left of State Street Corp.’s $625 million reserve might not be enough “to address legal exposure associated with the underperformance of certain fixed-income strategies managed by SSgA,” the company said in an SEC filing.
In the “legal proceedings” section of the bank’s latest 10-Q filing, State Street said it had made aggregate payments of $432 million as of June 30, leaving $193 million in the reserve set aside in late 2007.
In June, SEC staff members informed State Street that they would ask the SEC commissioners to authorize a civil enforcement action against the bank, alleging violations of antifraud provisions of the federal securities laws.
“We are in discussions with the SEC regarding this inquiry,” according to today’s State Street filing. If an enforcement action results, the remainder of the reserves set aside may not be enough to cover “ongoing litigation” or any penalties or remedies, according the filing.
