Currenex and FX Connect Parent Company Fined $35m by the US SEC
State Street has agreed to settle with the US financial watchdog over its fraudulent actions.
“The SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm. According to the announcement, State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions…”
“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges.
Hidden Last Look
In a separate SEC order, the agency finds that State Street failed to inform subscribers to its government securities trading platform called GovEx that, despite marketing the system as “fair and transparent”, it provided one subscriber with a ‘Last Look’ trading function that allowed a short period of time for the subscriber to reject a match to a submitted quote.
“The subscriber used Last Look to reject 57 matches that each had a $1 million face value,” the SEC elaborated. “State Street did not inform the counterparties that their orders had been rejected with Last Look. While developing Last Look, State Street even told one subscriber that the platform did not have Last Look functionality at all.”
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