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Compliance June 29, 2009
SEC to Consider SSgA Charges on Fixed-Income Fund Activities
Staff investigators at the Securities and Exchange Commission (SEC) have announced their intention to get permission from commissioners to file civil charges against State Street Bank and Trust Co. in connection with the activities of its State Street Global Advisors (SSgA) unit.
Reported by Fred Schneyer
The revelation came Monday in a State Street securities filing with the SEC, which said the potential civil charges concern SSgA activities in connection with “certain active fixed-income strategies during 2007 and prior periods.” State Street has been hit with a series of lawsuits alleging that its Daily Bond Market Fund took significant positions in risky subprime mortgage-backed securities without properly revealing that fact to investors (see “Minn. Firm Slaps State Street with Subprime Mortgage Suit“).
State Street said in the SEC document that it had received a “Wells Notice” that alerts a potential target to possible charges and provides for the target to present its case before the commission before an enforcement action is determined. The investment manager reported it has been cooperating with the federal agency and continues to work with the Massachusetts Secretary of State, the Massachusetts Attorney General, and other regulators in their related probes (see “MA Investigating State Street Wrongdoing in Pension Investments“)
The firm set aside a reserve of $625 million in 2008 to deal with potential lawsuits involving some of its fixed-income strategies (see “State Street Names New SSgA Chief, Takes $279M Reserve“).
The State Street SEC filing is available here.