State Street Corp. lost a bid to dismiss a lawsuit by an Arkansas pension fund that says the custody bank profited off foreign-currency trades at the expense of clients.
State Street’s motion to dismiss the complaint brought by the Arkansas Teacher Retirement System was denied by U.S. District Judge Mark Wolf in Boston, according to an order yesterday.
The pension fund says State Street charged inflated rates when buying foreign currency for clients and reported deflated rates when selling, pocketing the difference between the actual and reported rates.
The trading practices earned State Street hundreds of millions of dollars in profits annually that were “taken directly from the pockets” of the pension fund and other clients, according to the complaint.
State Street was disappointed by the ruling and will fight the claim, Alicia Curran Sweeney, a spokeswoman for the Boston-based company, said in an e-mail.
The case is Arkansas Teacher Retirement System v. State Street Corp., 11-10230, U.S. District Court, District of Massachusetts (Boston).