State Street Corp. will pay at least $382 million to settle charges that the custody bank deceived some of its institutional clients about its foreign-exchange transactions, including false claims of providing best execution on FX trades, the Justice Department and SEC announced.
State Street agreed to pay $155 million to the U.S. Department of Justice, $167 million in disgorgement and penalties to the Securities and Exchange Commission and at least $60 million to pension plan clients, according to news releases from the two federal agencies.
The Justice Department said State Street Global Markets, the firm's asset servicing division, “generally did not price FX transactions at prevailing interbank market rates. Instead, State Street admitted that SSGM executed FX transactions by applying a predetermined, uniform markup for buyers or markdown for sellers to the prevailing interbank rate for FX,” according to the Justice Department release. State Street was also accused of falsely guaranteeing the most competitive rates available on FX transactions, the Justice Department said.
The Justice Department, the SEC and State Street did not name the pension funds affected by the settlement.
State Street said in a statement: “Matters of this nature can drain both time and resources; so where possible and appropriate we feel it is in our and our clients' best interests to pursue settlements. Our previously established reserve will be sufficient to cover all costs associated with these agreements.”