What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: July 27, 2016

The Securities and Exchange Commission (SEC) announced yesterday that State Street Bank and Trust Company has agreed to pay $382.4 million in a global settlement for misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades. The SEC found that State Street realized substantial revenues by misleading custody clients about Indirect FX (foreign currency exchange trading), telling some clients that it guaranteed the most competitive rates available. State Street instead set prices largely driven by predetermined, uniform markups and made no effort to obtain the best possible prices for these clients. State Street 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.

The SEC will issue its order instituting the settled administrative proceeding only after a federal court approves State Street’s proposed settlement with private plaintiffs in pending securities class action lawsuits concerning its price of foreign currency exchange trades. State Street agreed to admit certain findings in the SEC’s order. The SEC’s Division of Enforcement Director, Andrew J. Ceresney stated: “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 the customers about their trading costs.” State Street will be required to pay $75 million in disgorgement plus $17.4 million in interest to harmed clients as well as a $75 million penalty.

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