January 18, 2017

Massachusetts-based global financial services company State Street Corporation agreed to pay a $32.3 million criminal penalty to resolve charges it engaged in a scheme to defraud a number of the bank’s clients by secretly applying commissions to billions of dollars of securities trades. The company also agreed to pay the SEC a civil penalty of the same amount to settle related charges for a total government payout of roughly $65 million. According to company admissions, bank employees conspired to add secret commissions to fixed income and equity trades performed for at least six clients of the bank’s “transition management” business, which helps institutional clients move their investments between and among asset managers or liquidate large investment portfolios. The commissions were charged on top of fees the clients had agreed to pay the bank, and despite written instructions to the bank’s traders that generally reflected that the clients were not to be charged trading commissions. State Street employees took steps to hide the commissions from the clients. DOJ

Tagged in: Financial Institution Fraud,