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State Street Agrees to $382.4 Settlement Related to FX Trades

The SEC recently announced that State Street has agreed to a settlement of $382.4 million for misleading funds and other custody clients about mark-ups on foreign exchange currency trades.  According to the SEC’s release, State Street’s custody services include allowing clients to buy and sell foreign currencies as needed to settle transactions in foreign currencies.  Although State Street told clients that it would give them the most competitive rates available, best execution, or charge market rates on these foreign currency trades, the SEC founds that State Street actually set prices using “predetermined, uniform markups and made no effort to obtain the best possible prices for these clients.”

The SEC will not issue the settlement order until after a federal court approves State Street’s proposed settlement of private class action claims related to its pricing of these foreign currency trades.