Nov. 10 (Bloomberg) — State Street Corp., the third-largest custody bank, said the government is seeking information about how it solicited asset-service business from public retirement plans.
State Street is responding to subpoenas from the Department of Justice and the Securities and Exchange Commission for information, the Boston-based firm disclosed today in a regulatory filing.
The firm said it has retained counsel to conduct a review, including the use of consultants and lobbyists to solicit business from pension plans, and that an adverse regulatory outcome could have a "material effect" on its business and reputation.
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Regulators in recent years have scrutinized the role of money managers and intermediaries who use connections with public officials to gain access to U.S. public pension systems. In one of the largest "pay-to-play" scandals, former New York State Comptroller Alan Hevesi spent 20 months in prison after pleading guilty to directing $250 million in pension funds to an investment firm in exchange for travel, gifts and more than $500,000 in donations. Private-equity firms including Carlyle Group, Quadrangle Group LLC and Odyssey Investment Partners LLC agreed to pay fines to regulators to settle such claims.
State Street rose 0.1 percent to $77.89 at 9:55 a.m. in New York.
Alicia Curran Sweeney, a spokeswoman for State Street, didn't immediately return a call and an e-mailed request seeking comment. State Street is the second-largest provider of exchange-traded funds worldwide and manages investment for individuals and institutions. As a custody bank, it keeps records, tracks performance and lends securities for institutional investors including mutual funds, pension funds and hedge funds.
Led by Chief Executive Officer Joseph Hooley, State Street has $28.5 trillion of assets under custody and administration, and $2.4 trillion it manages for investors.
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