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FCA fines State Street for TM failings
03 February 2014
State Street UK’s transition management business overcharged clients $20,169,603
“In 2011, we dismissed individuals centrally involved in the overcharging of transition management clients. Their behavior was unacceptable and a significant departure from the high standards of conduct and transparency that we expect and certainly not consistent with the manner in which our employees act on behalf of clients every day.
“Also in 2011, we notified all transition management clients about the overcharging, only six of whom were directly affected. We continue to have an open and transparent dialogue with our transition management clients to ensure they are aware of the actions we have taken over the past several years to strengthen our controls.
“We believe we now have industry leading controls within our transition management business and have bolstered our control functions in the UK, broadening the depth of talent that oversees our businesses.
“We have fully cooperated with the FCA during their investigation and appreciate that the FCA’s notice acknowledges the overcharging identified in the settlement relates only to our UK transition management business, that we have implemented a comprehensive remediation program in relation to the controls around the UK TM business, and that we have bolstered our control functions, governance and culture across all of our UK businesses.
“We are confident that we have addressed the weaknesses highlighted in the FCA’s notice and as a result, have emerged as a stronger organisation.”
State Street UK agreed to settle at an early stage of the FCA’s investigation and has therefore qualified for a 30% discount. Were it not for this discount, the FCA would have imposed a financial penalty of £32,692,800 on State Street UK.