Northern Trust Corp., the largest Chicago-based money management company, was fired Friday as custodian and index fund manager for the Illinois State Board of Investment, severing a 20-year relationship with five public pension funds.
The Illinois board, which invests for about 150,000 current and retired state employees, put the job up for review after saying that Northern Trust had incorrectly reported trading commissions by overstating the percentage of fees paid to minority- and woman-owned brokerage firms. Northern Trust said it did no misreporting.
State Street Corp. of Boston has been hired to succeed Northern Trust as overseer of business that generates about $3.5 million a year in fees for custodian services, securities lending, and management of two index funds with combined assets of $2.4 billion. Bank of New York Co. was the other finalist for the custodian work.
Northern Trust was ranked as Chicago's biggest money manager by Crain's Chicago Business.
