Reuters reports that in a complaint filed in the U.S. district court in Boston, the Arkansas Teacher Retirement System alleged that State Street’s “unfair and deceptive FX practice has generated as much as $500 million in profits annually.” It said this rate of profit accounts for roughly half of State Street’s foreign exchange profits over the last decade.
“This is money taken directly out of the pockets of State Street’s custodial customers,” the pension fund said, according to Reuters.
This is just the latest in a string of cases State Street is facing over its foreign exchange trades practices (see State Street Hit with New Forex Fraud Suit), including one on behalf of the California Public Employees Retirement System and the California Teachers Retirement System (see CA Charges State Street for ‘Unconscionable Fraud’ against Pension Funds).
The case is Arkansas Teacher Retirement System v State Street Corp et al, U.S. District Court, District of Massachusetts, No. 11-10230.
In response, State Street said it is “firmly committed to providing its clients with quality service and transparency in meeting their FX needs. We will vigorously defend the allegations made in the complaint and we stand by our business practices,” according to AI-CIO, an Asset International publication (see Arkansas Pension Sues State Street Over Currency Transactions).