State Street Hit with Forex Overcharge Suit
December 21, 2009 (PLANSPONSOR.com) – A Los Angeles law firm has filed a suit against State Street Bank and Trust alleging the company improperly inflated its financial performance by not disclosing a scheme to overcharge clients for foreign currency trades.
Glancy Binkow & Goldberg LLP said in a news release that its State Street suit requests class-action status to represent shareholders holding stock between October 17, 2006 and October 19, 2009.
The suit alleges that State Street lied about or failed to disclose:
- the company set up a scheme to substantially mark up foreign currency trades;
- the scheme caused State Street’s clients to overpay for such trades;
- the scheme allowed the company to reap illegal profits;
- as a result, the company’s financial results were materially inflated;
- the company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles; and
- the company lacked adequate internal and financial controls.
California Attorney General Edmund G. Brown, Jr. first accused State Street of the scheme in October when he filed suit on behalf of California Public Employees’ Retirement System ( CalPERS ) and California State Teachers Retirement System (CalSTRS) (see CA Charges State Street for ‘Unconscionable Fraud’ against Pension Funds).
The state suit, alleging an “unconscionable fraud,” charged that State Street overcharged the Golden State’s two giant public pension funds by more than $56.6 million over eight years for executing foreign currency trades.
The latest lawsuit is available here.