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SEC Informs State Street It Will Authorize Civil Enforcement Action For Violation Of Anti-Fraud Provisions
Many are pointing to State Street's just released 10-Q as the reason for increasing market weakness today. The new disclosure is that not only did the SEC file a Wells notice against State Street, but it will also be pursuing an enforcement action from STT, alleging violations of antifraud provisions of the federal securities laws. As the current amount available in SSgA's litigation reserve is a mere $193 million, the concern is that the newly disclosed enforcement action will reduce the reserve balance below zero. We will be following this development closely.
Legal Proceedings
Several customers have filed litigation claims against us, some of which are putative class actions purportedly on behalf of customers, including customers which invested in certain of State Street Global Advisors’, or SSgA’s, active fixed-income strategies. These claims related to investment losses in one or more of SSgA’s strategies that included sub-prime investments. In 2007, we established a reserve of approximately $625 million to address legal exposure associated with the under-performance of certain active fixed-income strategies managed by SSgA and customer concerns as to whether the execution of these strategies was consistent with the customers’ investment intent. These strategies were adversely impacted by exposure to, and the lack of liquidity in, sub-prime mortgage markets that resulted from the disruption in the global securities markets during the second half of 2007. After aggregate payments of $432 million, the reserve totaled approximately $193 million at June 30, 2009.
[On June 25], 2009, the Staff of the SEC provided State Street Bank with a “Wells” notice related to the SEC’s ongoing investigation into disclosures and management by SSgA of its active fixed-income strategies during 2007 and prior periods. The SEC Staff has informed us that it is proceeding with an enforcement recommendation to the SEC Commissioners asking the SEC Commissioners to authorize a civil enforcement action against us alleging violations of antifraud provisions of the federal securities laws. We are in discussions with the SEC regarding this inquiry and with the Massachusetts Secretary of State, the Massachusetts Attorney General and other regulators regarding their related inquiries. If the SEC or other regulators were to pursue an enforcement action, they would likely seek monetary or other penalties or remedies. Depending upon the resolution of these governmental proceedings, the remainder of the reserve established in 2007 may not be sufficient to address ongoing litigation, as well as any such penalties or remedies.
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I hope this doesn't affect the Fed's accounts at STT.
OOOFFFAAAHHHH!!!
The SEC? You mean the lackeys of GS & JPM? Or was that the FBI? I get confused because they make everything so complex when they steal so a simpleton like me doesn't understand.
some climactic volume on the SPY daily last Friday -
perhaps. today is an inside day so far ...
but with the gap down and failed rally so far ...
is interesting. thrust to the downside would be nice.
other wise ..more absorbing of sellers and upward
and on ward ... is hard to make a buck trying to pick tops.
Valuations at nosebleed levels and the only ones buying are computers that sell less than a second later. Buy and hold takes on a whole new meaning!
The Rich says"
good articles; finance news & opinions daily
STT will have to pay a 20 million fine and suffer the indignity of receipt of a sternly worded letter. This is all the toothless crack hoes at the SEC are capable of doing. After all, most employees of the SEC want a life beyond the SEC. A life provided by the organizations they are regulating.
yeah. i was wondering how long does it take this time for the settlement to be announced?
gonna be tough to break that bac record...something like 37 minutes or so?
then again, let's hope Judge Rakoff gives us some ink on today's hearing!!
This is exactly why the SEC should be eliminated.
S ecure
E mployees future
C ompensation
Just ask Levitt, an employee of Bloomberg and GS, he knows.
thats good to hear The Rich says"
recommended; href="http://www.iamned.com" target="_blank">my newest bookmarked finance website
http://www...
Same guy pumping hits to his site.
But #31689, how can you be so cynical? Director of Enforcement Division Khuzami said in his speech to the NYC Bar on 8/5/09 that, "It is imperative that we convey to all defendants in SEC actions that we are prepared to go to trial and we will win . . ." Shoudn't we take him at his word?
http://sec.gov/news/speech/2009/spch080509rk.htm
I will add this link to the excellent example you provided and let you reach your own conclusions.
http://www.ft.com/cms/s/0/42f5a580-837f-11de-a24e-00144feabdc0.html
Me, I would rather be more cynical. However, I do try and keep some sense of sense about my outlook. That's why I simply refuse to be one more copper top.
Why, good sir, it almost sounds as if you and I are characterizing Director Khuzami as speaking out of both sides of his mouth. But HE would NEVER do that, right? HE'S from the government; HE'S here to
help us. Sorry for the carriage returns. My heart stopped as I was writing and my hand dropped onto the carriage return. To all here, I urge: Free your mind (if you haven't already done so).
Nice MARY...Try to make it look like you are actually doing something over at that utterly WORTHLESS EXCUSE of an agency... Why not just go to lunch...permenently??
You already are....
Tyler,
"autorize" ?
fixed thx
Fines like Mary has slapped them with are complete Chump change for these criminal firms.
THERE WILL BE NO JUSTICE UNTIL AMERICA SEES JAIL TERMS FOR THESE CROOKS!! GOLDMAN INCLUDED!
Jail terms AND asset seizures to reduce (however minimally) amount of taxpayer burden resulting from our "largesse".
Somewhat off-topic, yet of import: Based upon Q2 Operating (i.e., not Reported) earnings (88% reported), the S&P 500 Index now (at 1,004 of this writing) stands at a P/E of 27.52.
Featured on the playlist currently, a hit from the Summer of 1978 off of Jefferson Starship's album 'Earth'.
Given that EPS will likely double in 2010 (and I'm sure Goldman's Abbey Joseph Cohen would wholeheartedly agree) we have a forward P/E at a very reasonable 13.76.
And where will the earnings come from, you may ask? From the U.S. Governement!
... and yes, this was a message paid for and totally written by the fine folks at Dripping Sarcasm.
Dripping Sacrasm... because it it wasn't "dripping" all hell would break loose.
They will just get more TARP funding to bring the account up to requirements.
A good buddy of mine used to work for the SEC, and he was telling me, it might as well have been run by Jessica Simpson. Mary S. is the ultimate "Do Nothing & act busy" puppet.
yes, that would describe them perfectly
AKA Blazing Saddles.. Just working to get a hurrumph
Just face it folks! Wall Street runs this nation and everything in it, including and especially, the SEC. Mary Shapiro is living proof of this!
seems like lack of demand on the hourly bar still, hmmmm.
Was this action approved by GS? How much of a fine will taxpayers be assessd this time?
+1 funny
GS STK TANKING PAST 2 DAYS, LEADING INDICATOR FOR FINANCIALS & MKT AS A WHOLE!! SHORT THE HELL OUT OF IT, THE MOMENT HAS ARRIVED!!!
This is like treating lung cancer with listerine
Does that work?
just about SEC...
do you know something about the Senior Vice President, General Counsel of BATS??
It's funny, google it!
keep the updates coming..
LOL. back to my day job.
StStrt: Hello?
Treasury: You may prepare dut golden parachute!
StStrt: Why, why?!?
Treasury: You have been compromised, we won't tollerate a system error.
StStrt: But...
Treasury: There are not BUT's only SEC's. By-bye.
AIG just mailed them a package of green paper with dead presidents
Handle those carefully until the ink dries.
Is this to make up for missing Madoff? Because it isn't convincing.
maddoff needs to be hung but the nuts
I'm not excusing Madoff at all but, compared to the bad actors who are still conducting business, Madoff was chump change.
Just face it folks! Wall Street runs this nation and everything in it, including and especially, the SEC. Mary Shapiro is living proof of this!
The Rich says"
good articles; my newest bookmarked finance website