Securities & Investment Fraud

State Street Securities Litigation

Issue: False foreign exchange rates
Result: $300 million settlement

Arkansas Teacher Retirement System v. State Street Corporation, et al.

Lieff Cabraser is co-counsel for a proposed nationwide class of institutional custodial customers of State Street, including public pension funds and ERISA plans, who allege that defendants deceptively charged class members on FX trades done in connection with the purchase and sale of foreign securities. On November 2, 2016, U.S. District Senior Judge Mark L. Wolf granted final approval to a $300 million settlement of the litigation.

Similar to the action against BNY Mellon, the complaint charged that between 1999 and 2009, State Street consistently incorporated hidden and excessive mark-ups or mark-downs relative to the actual FX rates applicable at the times of the trades conducted for State Street’s custodial FX clients. State Street allegedly kept for itself, as an unlawful profit, the “spread” between the prices for foreign currency available to it in the FX marketplace and the rates it charged to its customers.

Plaintiffs sought recovery under Massachusetts’ Consumer Protection Law and common law tort and contract theories. In May 2012, the Court denied State Street’s motion to dismiss in all substantive respects. Thereafter and until the November 2016 settlement, the parties had been engaged in mediation and discovery.

Lieff Cabraser is also actively involved in counseling other state pension and ERISA funds with respect to their potential exposure to FX manipulation by custodial service providers.