Yesterday, State Street announced that it initiated a review of “the manner in which it invoiced certain expenses to asset servicing clients.” According to the firm, preliminary results indicate that it incorrectly invoiced some clients for expenses totaling $200 million for the 18 years for which the firm has accessible records. State Street said that it “will compensate affected clients fully, including interest, and make any required improvements to its billing practices” after it has completed the review.
The overall amount invoiced for that period in the applicable expense categories was approximately $400 million. The firm noted “[i]n fiscal year 2014, the categories of expenses under review represented approximately 0.7 percent of State Street’s total asset servicing fee revenue of $5.1 billion.” The Boston Globe reports that the expenses are “out-of-pocket” costs such as “postage, printing, couriers, and supplies,” citing a State Street spokeswoman. According to the article, State Street has been in touch with regulators over the issue.