Ex-State Street executives charged in U.S. for defrauding clients

[nitpicker]

http://www.cnbc.com/2016/04/05/

Ex-State Street executives charged in U.S. for defrauding clients
Tuesday, 5 Apr 2016 | 10:58 AM ET
Reuters


U.S. prosecutors announced charges on Tuesday against two former State Street executives for scheming to defraud six clients, including Irish and British government pension funds, through secret commissions on billions of dollars of trades. Ross McLellan, a former State Street executive vice president, was arrested on charges including securities fraud and wire fraud, prosecutors said. The indictment was filed in federal court in Boston, where the custody bank is based. The indictment also charged Edward Pennings, a former senior managing director at State Street who is believed to be living overseas and was not arrested, prosecutors said.

McLellan, 44, was arrested in Hingham, Massachusetts, where he lives, and will appear later in the day in Boston federal court. Martin Weinberg, McLellan's lawyer, said in a statement that the evidence would show his client "committed no criminal acts and had no criminal intent." A lawyer for Pennings, 45, could not be immediately identified. A State Street spokeswoman did not immediately respond to a request for comment.

The case followed a 2014 settlement between State Street and the UK Financial Conduct Authority in which the bank paid a fine of £22.9 million (about $37.8 million) for charging the six clients "substantial mark-ups" on certain transitions.

According to the U.S. indictment, McLellan, Pennings and others conspired from February 2010 to September 2011 to add secret commissions to fixed income and equity trades performed for the six clients of a unit of the bank. That unit helps institutional clients move their investments between asset managers or liquidate large investment portfolios, prosecutors said.
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