UK watchdog fines State Street millions for overcharging NTMA
Britain's financial watchdog fined State Street £23m (€28m) for deliberately overcharging the National Treasury Management Agency (NTMA) and five other clients.
The overcharging involved State Street employees taking unauthorised commissions linked to NTMA-controlled National Pension Reserve Fund trades when the fund was selling off assets worth €4.7bn. The NTMA was later repaid €3.2m.
The NTMA said last night that it was now considering what action to take. State Street is a large employer in Dublin, Kilkenny and Kildare.
The UK watchdog said State Street acted with "complete disregard" for the interests of its customers.
The fine is one of the largest dished out by the UK watchdog recently.
Between June 2010 and September 2011, State Street UK, a unit of Boston-based custody bank State Street, overcharged six clients a total of $20.2m (€15m), the Financial Conduct Authority (FCA) said.
Those clients included the NTMA, 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 transactions for fund managers.
The FCA said the firm had developed and executed a deliberate strategy to charge substantial mark-ups on agreed fees. The overcharging contributed over one-quarter of revenues at the business unit responsible.
The overcharging was also concealed from clients, the FCA said, and only came to light after one discovered the mark-ups on certain trades that had not been agreed 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 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.
State Street was given a 30pc discount on its fine for settling with the FCA at an early stage.