The office of Secretary William F. Galvin, Massachusetts’ top securities regulator, announced this week that he had launched an investigation into State Street’s foreign exchange operation two months ago. California and the Arkansas Teacher Retirement System are investigating the custody bank for similar misdeeds.
The investigation stems from allegations made by Associates Against FX Insider Trading, a whistleblowing group. California, the first state to investigate, claims State Street defrauded state pensions of $56 million since 2001, and is seeking more than $200 million in damages and penalties.
State Street competitor Bank of New York Mellon Corp is under investigation by Virginia, Florida, and Pennsylvania. Both companies have pledged to fight suits filed against them.
