"We Are Taking Them To The Cleaners" - State Street Caught Stealing From Clients With Up To 1,900% Markups

Tyler Durden's picture

In a scene right out of Office Space, one week ago we read that TD Bank, the fourth-largest retail bank in Massachusetts, was pulling out its coin-counting equipment for "servicing" following reports that the machines were short-changing customers who came in to exchange their nickels and pennies for bills. As a recent NBC’s Today show revealed when it tested several coin counting machines, it found that TD’s Penny Arcades weren’t accurate. In one case, the bank’s machine gave $43 less than the change deposited.

TD officials said they were disappointed by the “Today” show’s experience. “All of our coin-counting machines are in the process of being taken out of service and will be evaluated and retested,” TD said in a statement.

What else were they going to say: that they literally nickel and dime their customers?

But while that excuse may have flown, another far more egregious example of "nickel and diming" from one's clients was revealed today when Massachusetts' top securities regulator alleged a unit of custody bank State Street Corp routinely overbilled customers for items such as messaging services, even as an executive worried one client might "discover that we are taking them to the cleaners."

According to Reuters, in its administrative complaint, Secretary of the Commonwealth William Galvin said State Street has engaged in a pattern of overcharging, noting the company often labeled charges for secure electronic messages, also known as SWIFT messages, as "out-of-pocket" expenses that contained concealed markups of up to 1,900 percent.

In a statement e-mailed by spokeswoman Anne McNally, State Street said in December "it discovered invoice errors on some expenses and notified authorities including Galvin's office. It will repay clients and reform its billing practices as needed."

Here is an artist's impression of how shocked the bank was when it "discovered" it was stealing from its customers.

The bank also has been in talks with clients over the matter, it said, as well as with government authorities, with whom it pledged to cooperate. "We deeply regret this error," the statement said, adding the bank cannot comment further because an internal review is still ongoing.

This is not the first time State Street has gotten in trouble for nickel-and-diming.  In a 2014 settlement with the United Kingdom Financial Conduct Authority, State Street agreed to pay of a fine $32.91 million for charging clients "substantial mark-ups" they had not agreed to pay.

Apparently the bank thought that a few years later nobody would remember, so it reverted back to its old ways.

Also, in what Galvin's complaint calls "a related matter," U.S. prosecutors earlier this month alleged two former State Street executives conspired to add secret commissions to fixed-income and equity trades.

Galvin's complaint claims State Street routinely concealed markups to clients and earned hundreds of millions of extra dollars, in what it describes as "a dishonest and pervasive culture of overbilling."

He could have used another perfectly acceptable word: stealing.

But why didn't State Street fight the accusations? Simple: it admitted long in advance that it was aware it was stealing from its customers.

The complaint quotes several internal emails suggesting its own employees were concerned about how it billed expenses. One wrote that a charge of $5 per message was "an exorbitant markup that will certainly piss off clients when they figure this out."

Another wrote of a concern that a large client might discover that "we are taking them to the cleaners on SWIFT charges."

Even better: State Street knew it had been exposed when clients described in the complaint as "an international financial organization" and "a boutique investment manager" did raise concerns about their bills but got little relief at least initially, the complaint states.

Only when the regulator stepped in did the stealing stop.

Galvin's complaint seeks a censure, an administrative fine and other actions including client reimbursements.

Translation: State Street will repay what it has stolen and will quietly resume doing so in a few months. Meanwhile, all other financial companies that engage in identical overbilling and massive markups - which is most of them - will continue doing just that.

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skinwalker's picture

Yet another highly profitable industry I didn't come up with. Some guys get all the breaks. 

KnuckleDragger-X's picture

Some more...forever...till they get caught again..........

38BWD22's picture



State Street is TBTF, one of the SIFI banks.

They will only get a slap on the wrist...

Mr. Universe's picture

IDK, just take a look at the length of those jail sentences for the...uh never mind.

macholatte's picture

Hypothetical Scenario:
A bank has a credit card operation with 100 million customers (see Citi Group) and programs its computers to overcharge customers ten cents a month on the merchant side and the purchaser side. Practically nobody is going to find such an “error” or spend the time to complain about it.
Such a scam could yield $20M per month in revenue.

doctor10's picture

20 million a month has enough room in it for Ivy League scholarships for the children of whatever Federal regulators want to get all regulatory about.

Dicey's picture
Dicey (not verified) macholatte Apr 20, 2016 4:11 PM

You know ZH it is possible that TD bank machines were faulty, not everything is a scam or conspiracy. 

macholatte's picture

not everything is a scam or conspiracy.


He speaketh blasphemy!

armageddon addahere's picture

I would believe it was an accident, if the machines were overpaying.

NoDebt's picture

Stackers- you missed one.  They also steal from their own employees ESOP plan:


Countrybunkererd's picture

Some guys have no soul.  Theft is theft.  All theft is equal but some theft is more equal than others.

sgt_doom's picture

Remember, please . . .

State Street is one of the Big Four investment firms, those four firms which are the majority shareholders in the majority of major corporations in North America and Europe (don't know about Asia and Africa, might apply there as well????).

That means they are the majority shareholders in the top five banks, the top three health insurance providers, the top biopharmaceuticals, oil and energy companies, insurance corporations, the top 100 newspapers and the top five media corporations!

Not an insignificant item . . .

Ivanka2032's picture
Ivanka2032 (not verified) Rigger Apr 20, 2016 3:02 PM

Is this that State Street with Joseph L Hooley as CEO?




"State Street: You won’t find CEO Joseph L. Hooley on wikipedia and he possesses but a lowly BS degree from Boston College, yet his company is the number one shareholder in Bank of America, JP Morgan and Citigroup, as well as the third largest shareholder in Wells Fargo. Check out any major blue chip stock and they are likely big investors."

sgt_doom's picture

Hager is a bit flakey, to say the least!

He believes that the three tramps photographed on the day of the JFK assassination have been identified, which most assuredly they haven't been --- officially speaking, that is (in other words, they aren't Woody Harrelson's dad, nor E. Howard Hunt, nor whomever else they claim).


N0TaREALmerican's picture
N0TaREALmerican (not verified) Apr 20, 2016 2:58 PM

Now THAT'S an example of the strong regulation and ENFORCEMENT that Hillary will demand when she is elected.  

Tachyon5321's picture

LOL, Chase has pulled out their coin counting machine of all branches in the midwest first of the year. What took TD so long.

Dubaibanker's picture

I am shocked, I tell you, I am shocked!

Who were the auditors? Who were the regulators? Where was the board? Or were they all on the take?

Shouldn;t the directors go to jail? All the freaking courses and rules that have to abide by!

Unless a director goes to jail, nothing is gonna change!

Hey, a man can dream!

sgt_doom's picture

Who employs auditors anymore?

DaBard51's picture

I am shocked!  Absolutely shocked! at such behaviour.

Yen Cross's picture

   I wonder how many gas stations those fuckers own?  </sarc>

Sudden Debt's picture

Off course they should charge! Aren't they the guardians of our savings?.....

And as long as you don't withdraw it all back, it's all there...

Ivanka2032's picture
Ivanka2032 (not verified) Sudden Debt Apr 20, 2016 3:08 PM

You can check out any time you want, but you can never leave.

DaBard51's picture

so, has anyone looked at what BNY extracts for handling your ADRs, along with their coin-counting machines?

south40_dreams's picture

They made their money the old fashion way, they stole it

strangeglove's picture

TDBank in White Plains NY not only took the coin machines out, they took the signs down, locked the doors and Fled! At least two branches on rte 100 are closed I haven't checked the others.

sgt_doom's picture

Hmmmm.....State Street. . . one of the Big Four who own everything (Vanguard Group, BlackRock, State Street and Fidleity).

So who is the major shareholders in TD Bank?

State of Tennessee and Paradigm Asset Management Company.

So who is the major shareholder in Paradigm?

Microsoft, MetLife, Valero Energy and BlackRock.

So who is the major shareholders in Microsoft? 

Vanguard Group, BlackRock, State Street and Fidelity.

Ditto Metlife, Valero and . . . well, we should know by now who BlackRock is . . .

It's all connected, it all begins to make sense . . . .

(Yeah, you do have to drill down a bit more to find out who the end shareholders are, but it almost always works out to the Big Four, or three of them and one unknown entity!)

buzzsaw99's picture

1900% beats the hell out of zirp.

Arnold's picture

And...... they made their volume quota.

38BWD22's picture



You got that right, buzz.

Claire Voyant's picture

A quote from ancient Burmese Monk:
"Man who trust broker, end up broker"

Yen Cross's picture

   I wonder if Corzine is a shareholder or honorary board member of State Street Corp?

   * Credit Union> Bitchez

Dickweed Wang's picture

* Credit Union> Bitchez



All of the morons currently using TBTF banks of ANY kind need to take their money out and put in in their LOCAL credit union ASAP - otherwise they deserve to lose every cent they have deposited in the TBTF institutions.  I haven't used a main stream bank in all of my adult life and I've been doing just fine using my local credit union.

Nobody For President's picture

Yep - went to regional banks from TBTF 15 years ago, two years ago went to local CCU, should have done it 10 years ago. Hell, I know more than 1/2 the members of the board of the truly local bank - (And yes, they are good people).

E.F. Mutton's picture

This could be serious.  I'm talking at LEAST a $750 fine.

MsCreant's picture

The truth. 

The real reason the economy is slowing down is because everyone is having so much money stolen from them through taxes, inflation and outright theft there is simply NO MONEY LEFT. 

doctor10's picture

ya left out O'Care-the icing on the cake Ms.

Miss Expectations's picture

FAG Frosting is a bigger story.

besnook's picture

fags are more important than wealthy people stealing money from other wealthy people and pickpocketing the change of poor people. didn't you get your pc update?

Dickweed Wang's picture

One wrote that a charge of $5 per message was "an exorbitant markup that will certainly piss off clients when they figure this out.


I doubt that the $5 charge referenced above is going to piss anyone off. For crying out loud, in the health care industry you have hospitals charging fees like $25 for two (2) Tylenol or $350 for a bag of salt water (i.e. saline solution) so why would anyone get worked up about a $5 messaging fee.  Oh, I know why . . . it's because in the case of the messaging fee the actual customer is getting reamed while in the case of the outrageous hospital bills it's the insurance companies that have the pay the cost directly - not the consumer.  In the later case since the idiot consumers aren't getting charged directly they think everything is fine . . . . I have a news flash for them, IT'S NOT FINE.

devo's picture

Bank error in our favor. Do not pass go, do not collect $200. Bend over and take it in the arse.

dabockwai's picture

As a former employee of this "bank" from decades ago I can say without question that this place is managed by the biggest group of thieves/incompetent assjacks that would boggle the mind and its finally coming to light.  I have seen pension fund acct mgmt on an epically incompetent scale from this institution.  People that are totally unqualified in their jobs and who have turned pension fund accts with billions invested into an incomprehesible trade F up mess.  And the sad thing about it was that the client (annonymous public pension fund in CA) had no clue that their accts were a total mess all during the time it was happening.  So hats off Mr. Durden, you write this post with the knowledge and experience of an actual State Street employee, even if you might not be one.

cuban555's picture

dabockwai, could you be kind enough to expand on this comment and private email me at cuthen255atgmaildotcom. I am very much interested and this could be very BIG (for both of us) Thks.

dabockwai's picture

Check your contact requests here.

Shizzmoney's picture



BOSTON — Despite hundreds of layoffs over the past few years, State Street Corporation remains one of Massachusetts’ biggest employers. On July 11, that status helped the company land an $11.5 million tax break from the City of Boston to move into a new building on the South Boston waterfront. But as State Street prepares to take Southie, one former employee is warning that the company’s local commitment has its limits.


Dan Armstrong worked as a mutual fund administrator at State Street Corporation for more than 8 years. A year ago, Armstrong said, he and his colleagues were called into a surprise meeting with an executive.

“He said, ‘As you know by now, all your jobs, your unit’s work, will be sent to India,'” Armstrong recalled. “'And you’re going to have people from India coming from Syntel to train with you at your desks to do your jobs.'”


dabockwai's picture

News flash, I was an employee of SS in the early to mid 90s and when my tenure was coming to a close I warned every last one of the drooler PAs in my office that all their jobs would eventually be outsourced offshore.  Not that a bank employee thats not even mid mgmt is lucrative, but it was painfully obvious that the work these employees were doing could rather easily be offshored to Indian MBAs for a less than a quarter of what they were being paid.  You see the writing on the wall and warn these sheep that this is what would happen and although it took a hell of a lot longer than I expected it finally did happen.

gregga777's picture

The banking and Con Street financial system are entirely criminal enterprises operating with the full acknowledgement and support of the Feral government's "regulatory" and "law enforcement" agencies. The criminal enterprises deliver a generous portion of their loot to the Democratic and Republican Party political parasites for protection from their clients.

cuban555's picture

dabockwai plz contact me at cuthen255atmaildotcom.