Articles Tagged with State Street

State Street Resolves SEC Fraud Charges for $35M
To settle charges brought by the US Securities and Exchange Commission, State Street (STT) will pay over $35M to resolve charges accusing the financial firm of overcharging transition management customers in secret, purportedly making $20M in improper revenue in the process, and leaving out material information related to GovEx, the trading platform it uses for US Treasury securities. The charges against State Street were brought in two separate orders.

In the first SEC order, the firm is accused of using false trading statements, post-trade reports, and pre-trade estimates so it could misrepresent the compensation it received on different transactions. After one customer noticed certain concealed markups, State Street’s employees claimed that these were “inadvertent commissions.”

In the second order, the SEC said that the firm did not notify GovEx subscribers that although the trading platform had been touted as “fair and transparent,” one subscriber was given a “Last Look” option that briefly allowed for the opportunity to turn down matches to quotes that were submitted. The Last Look trading functionality was used by that subscriber to turn down 57 matches, each face valued at $1M. Counterparties were not notified by State Street that Last Look had rejected their orders.

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After Pleading Guilty, Massachusetts Money Manager Must Repay Investors
Stephen Eubanks is sentenced to 30 months behind bars for bilking investors of $437K. He also must pay restitution in that amount to his more than 20 victims.

Eubanks presented himself as a hedge fund manager at Eubiquity Capital, which he founded. He raised over $700K from investors and claimed that he was running a hedge fund that had ties with UBS (UBS), TD Ameritrade (AMTD), Fidelity, and Goldman Sachs (GS).

While Eubanks invested some of the clients’ funds for them he also spent a healthy amount of their money on his own spending. Eubanks also is accused of on occasion operating his fund as if it were a Ponzi scam.

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SEC Files Fraud Charges Against Former State Street Executive
The U.S. Securities and Exchange Commission is filing fraud charges against ex-State Street Corp. (STT) executive Ross McClellan. According to the regulator, McLellan was one of a number of people who purposely charged hidden markups on certain transactions to customers, making the bank $20M in extra revenue.

Addressing the charges, McLellan’s lawyer claims that his client did not commit any securities law violations and that all banks charge client markups on bond transactions to make money. The attorney also noted that it was State Street and not the bank that profited from the charges.

The U.S. Department of Justice has charged McLellan with securities fraud, conspiracy, and wire fraud.

Ex-Wells Fargo Broker to Be Barred
Christopher John Pierce, a former Wells Fargo & Co. (WFC) broker, will be barred from working with any FINRA-registered firm and associating with any member of the self-regulatory organization. Pierce agreed to the bar after he was accused of stealing money from the accounts of banking customers.

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