London police are investigating client overcharging at State Street Corp.’s U.K. unit that led to a 22.9 million-pound fine ($38.1 million) from regulators, an Irish fund official told lawmakers in Dublin.
“We have been providing substantial assistance to the City of London Police in an investigation that’s still ongoing,” said Eugene O’Callaghan, investment director at the National Pensions Reserve Fund, said at a parliamentary hearing today.
The U.K. Financial Conduct Authority fined State Street on Jan. 31 for charging clients “substantial” mark-ups without their consent. From June 2010 until September 2011, Boston-based State Street deliberately overcharged six clients a total of $20.2 million, the FCA said.
The NPRF told lawmakers in Dublin in 2012 that it had been a victim of the overcharging by State Street. The fund reported the matter to the Irish police and City of London Police the same year, O’Callaghan said today, adding that the Irish police, known as the Garda, left the issue to U.K. authorities.
Lucy Davidson, a spokeswoman for State Street in London, declined to comment, saying it was a matter for the City of London Police. The bank said after the FCA fine that it had “dismissed individuals centrally involved in the overcharging” in 2011.
State Street Bank Europe has repaid the NPRF the 3.2 million euros it was overcharged, John Corrigan, chief executive officer of Ireland’s National Treasury Management Agency, which oversees the NPRF, told the parliamentary hearing today.
On Feb. 3, following the FCA fine, the NPRF terminated its contract with State Street Global Advisers, which managed an indexed equity mandate for the fund, he said.
The City of London Police declined to immediately comment on the matter.