A federal judge granted preliminary approval of an $89.75 million settlement of claims by a group of pension plans against a State Street Corp. unit over allegedly risky, undisclosed investment strategies.

In an order Wednesday, District Judge Richard J. Howell in Manhattan gave initial approval to the settlement with State Street Bank and Trust Co. over claims related to its investment strategies for certain bond funds, including "highly leveraged positions in mortgage-backed securities."

The State Street unit signed a binding term sheet for the settlement with representatives for a class of pension plans in June.

However, State Street had opposed preliminary approval of the proposed settlement, saying its separate, ongoing settlement negotiations with the Securities and Exchange Commission make it impossible to determine whether the proposed settlement is fair, reasonable and adequate, the judge said.

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