(Reuters) – State Street Corp. agreed to pay a $ 115 million fine and file a deferred prosecution to resolve allegations the bank has defrauded customers of by secretly exaggerating them for back office expenses, the U.S. Department of Justice said Thursday.
According to settlement documents, State Street admitted that from 1998 to 2015, its executives defrauded customers of more than $ 290 million through hidden markings.
The Boston-based company also admitted that its executives tried to hide the mark by leaving details from invoices and "actively" misleading customers who questioned them.
State Street deceived customers "in a very pedestrian way: They complained about hidden markings at routine cost of their own expenses," U.S. Attorney Nathaniel Mendell said in a statement.
The two-year deferred prosecution agreement resolves a wire fraud charge and requires State Street to maintain independent surveillance oversight. It also took into account the company's cooperation and agreement to fully compensate the victims.
"We apologize for the inconvenience," State Street said in a statement. "We have also invested and continue to invest significant resources to improve and strengthen our billing processes, controls and governance."
The bank said it had previously set aside funds to cover the settlement.
State Street is one of the world's largest custodian banks providing services such as accounting, asset valuation, currency trading, portfolio services and equity lending.
It had $ 40.3 trillion in assets under custody and administration on March 31
Thursday's agreement followed $ 94.3 million of related civilian settlements in June 2019 with the U.S. Securities and Exchange Commission and Massachusetts Attorney General Maura Healey.
State Street agreed separately in January 2017 to enter into a deferred prosecution agreement and pay $ 64.6 million to resolve criminal and civil charges, introducing secret securities trading missions.
And in July 2016, it agreed to pay 530 million to settle regulatory probes and private lawsuits concerning overheads for transactions in foreign currency.