State Street UK fined £22.9m for TM failings

State Street UK has been fined £22,885,000 by the Financial Conduct Authority (FCA) for Transitions Management failings.

State Street UK’s Transitions Management (TM) business had developed and executed a deliberate strategy to charge clients substantial mark-ups on certain transitions, in addition to the agreed management fee or commission, the FCA said.

These mark-ups had not been agreed by the clients and were concealed from them.

TM is a service provided to clients to support structural changes to asset portfolios with the intention of managing risk and increasing returns. TM services may be required when a client needs a large portfolio of securities to be restructured, or when a client decides to remove or replace asset managers.

Tracey McDermott, director of enforcement and financial crime at FCA, said:

“The findings we publish today are another example of a firm that has acted with complete disregard for the interests of its customers. State Street UK allowed a culture to develop in the UK TM business which prioritised revenue generation over the interests of its customers.

“State Street UK’s significant failings in culture and controls allowed deliberate overcharging to take place and to continue undetected. Their conduct has fallen far short of our expectations. Firms should be in no doubt that the spotlight will remain on wholesale conduct.”



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