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You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

The multi-million dollar consequences of securities fraud

Experienced investors put a great deal of faith in financial services companies to manage their valuable assets and maximize their value. They understand that fees are part of sound investment strategies and advice. Their hope is that the growth of their portfolios will more than cover the cost of doing business.

A handful of clients trusted that doing business with State Street would not involve charges for trading commissions. The company agreed to the written demand. However, employees in their transition management business saw things differently.

Misplaced Trust In High-Stakes Investments

State Street Corporation’s transition management business moves investments between and among asset managers and liquidates large investment portfolios. In the scheme to defraud a number of clients, commissions were applied in secret to billions of dollars of fixed income and equity trades. Those additional charges hidden from clients and added to the fees they agreed to pay.

Ignoring their clients’ explicit instructions in writing placed them and their employer in the sights of federal authorities.

A Successful Pursuit Of Justice

On January 18, the Massachusetts-based global financial services company entered into a deferred prosecution agreement. State Street will pay a 32.3 million dollar criminal penalty and the same amount as a civil penalty to the U.S. Securities and Exchange Commission (SEC).

Due to their failure to disclose misconduct, State Street did not receive credit for their voluntary disclosure. In fact, their lack of cooperation with the SEC investigation and inadequacies in internal investigations delayed their disclosure of all relevant facts. For that, they received partial cooperation credit.

While State Street has fully repaid victims of the scheme, refunds do not take away from the illegal actions. Investing hard-earned money has risks. The stakes are high. Securities law violations can have a devastating impact on financial portfolios at all income levels.

Pursuing justice is an important step in recovering money and holding financial services companies accountable for securities fraud.

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