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The Securities and Exchange Commission on Tuesday announced that
State Street CorporationSTT has agreed to pay $382.4 million in a global settlement deal for allegedly misleading custody clients about how it priced exchange rates for foreign currency trades.
A global provider of financial services to institutional investors, State Street's custody bank line of business offers clients indirect foreign currency exchange trading as needed to settle client transactions involving foreign securities. According to the press release, the SEC investigation found that State Street realized substantial revenues by misleading mutual funds and other custody clients by applying hidden markups to exchange trade rates.
State Street has agreed to pay $167.4 million in disgorgement and penalties to the SEC, a $155 million penalty to the Department of Justice, and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.
"State Street misled custody clients about how it priced their trades and tucked its hidden markups into a corner where they were unlikely to notice. Financial institutions cannot mislead their customers about their trading costs," said Andrew Ceresney, director of the SEC's Division of Enforcement.
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