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""State Street Bank and Trust"":http://www.statestreet.com agreed Thursday to pay the ""Securities and Exchange Commission"":http://www.sec.gov (SEC) $313 million to settle claims that it misled a select group of investors about their exposure to subprime mortgages.
[IMAGE]The _Wall Street Journal_ called it ""one of the strongest sanctions yet for behavior during last decade's credit boom.""
[COLUMN_BREAK]The Boston-based money manager said in a statement to the press that the allegations centered around losses incurred from certain fixed-income strategies managed by State Street Global Advisors during 2007 and earlier periods. ""In reaching these settlements, State Street has not admitted or denied the allegations made by the regulators,"" the statement read.
According to charges filed by the SEC, as well as the Massachusetts Securities Division and the Massachusetts attorney general's office, State Street told certain investors that fund assets were diversified, when instead they were invested almost entirely in high-risk subprime mortgages.
At the same time, the company disclosed to its more elite clientele that the fund was a money-loser and advised them to cash in early. State Street's own pension fund was one of the investors privy to this information.
The $313 agreement reached Thursday is in addition to nearly $350 million State Street has already paid to investors to settle private claims of misrepresentations surrounding subprime mortgage investments.
