State Street Corp. announced Thursday that it has reached settlements to resolve investigations into losses incurred by and disclosures made around active fixed-income strategies managed by State Street Global Advisors.
The settlements are with the Securities and Exchange Commission, Massachusetts attorney general and Massachusetts Securities Division of the Office of the Secretary of State.
In the SEC settlement, State Street agreed to establish a $313 million "fair fund," which includes a fine of $50 million and disgorgement of advisory fees and interest of approximately $8 million. Combined with the approximately $350 million in prior client settlements, the total compensation to investors will be approximately $663 million.
The allocation of the payments from the fair fund to former investors in the active fixed-income funds has been agreed upon with the SEC.
Under the settlements with Massachusetts, State Street has agreed to pay $10 million each to the Massachusetts Secretary of State and the Massachusetts Attorney General.
A State Street spokesman said the Boston company's previously established legal reserve will cover the cost of the settlements.
In reaching these settlements, which surround investments made before 2007, State Street has not admitted or denied the allegations made by the regulators. "We value our reputation as a trusted fiduciary to institutions around the world and we recognize the critical importance of fulfilling our fiduciary obligations," said Ronald E. Logue, State Street's chairman and chief executive. "As such, we were determined to work with our regulators and with our customers to resolve their concerns around investments in certain of SSgA's active fixed-income strategies in 2007."