LONDON Jan 31 Britain's financial watchdog has
fined State Street UK 22.9 million pounds ($38 million) for
deliberately overcharging some of its clients, and said the
custody bank acted with "complete disregard" for the interests
of its customers.
Between June 2010 and September 2011 State Street UK
, a unit of the world's second-largest standalone custody
bank State Street Corp, overcharged six clients a total of $20.2
million, the Financial Conduct Authority (FCA) said.
Those clients included large investment management firms and
pension funds holding the funds and savings of retail investors.
Custody banks manage cash for companies and handle back-office
processing of securities and banking transactions for fund
The FCA said the firm had developed and executed a
deliberate strategy to charge substantial mark-ups on agreed
The overcharging was concealed from clients, the FCA said,
and only came to light after one discovered the mark-ups and
notified State Street staff.
"The findings we publish today are another example of a firm
that has acted with complete disregard for the interests of its
customers," Tracey McDermott, director of enforcement and
financial crime at the FCA, said.
State Street said in a statement it deeply regretted the
failings and had worked hard to enhance its controls over the
past few years. The firm also dismissed staff in 2011 who were
centrally involved in the overcharging.
"Their behavior was unacceptable and a significant departure
from the high standards of conduct and transparency that we
expect and certainly not consistent with the manner in which our
employees act on behalf of clients every day," it said.
"We believe we now have industry leading controls within our
transition management business and have bolstered our control
functions in the UK, broadening the depth of talent that
oversees our businesses," it added.
State Street was given a 30 percent discount on its fine for
settling with the FCA at an early stage.