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State Street to pay ERISA plan clients $60 million in settlement

An SEC investigation found that State Street brought in substantial revenue by misleading custody clients about currency exchange rates.

By Marlene Y. Satter | Updated on August 02, 2016
The State Street Global Markets division generally did not price foreign exchange transactions at prevailing interbank market rates.

Boston-based State Street Bank and Trust Co. has agreed to pay $382.4 million, of which $60 million will go to ERISA plan clients, to settle allegations that it deceived some of its custody clients when providing them with indirect foreign currency exchange services.

The settlement, in which State Street will pay $155 million to the U.S. Department of Justice, $167.4 million in disgorgement and penalties to the Securities and Exchange Commission and at least $60 million to Employee Retirement Income Security Act plan clients in an agreement with the U.S. Department of Labor, was reached after State Street admitted that its State Street Global Markets division generally did not price foreign exchange transactions at prevailing interbank market rates — which was contrary to how State Street presented the pricing to certain custody clients.

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