Edward Pennings, a former managing director of State Street
Corp., is pleading guilty to charges that he committed wire and
securities fraud in connection with the firms
According to court documents filed June 6 in the U.S.
District Court for the District of Massachusetts, Pennings
faces possible incarceration for five years, supervised release
for three years and a potential $250,000 fine. The case against
him, and Ross McLellan, a former State Street executive v.p.,
involved secret commissions applied to billions of dollars of
securities trades, according to a U.S. Department of Justice statement made in April 2016 about the
We deeply regret this matter and accept responsibility
for the actions of our former employee, a State Street
spokeswoman said in an email. We reimbursed the impacted
clients, terminated responsible employees, appointed new
executives to lead our transition management
She said that "over the past five years we have taken
significant steps to strengthen our controls for our transition
management business, and more broadly to enhance our compliance
program, culture and operating environment.
This matter has been disclosed in State Streets public
filings since 2012 and was the focus of the firms
agreement with the Department of Justice and Securities
Exchange Commission earlier this year, the spokeswoman
Roger Burlingame, a lawyer for Pennings in London,
couldnt immediately be reached for comment.
Pennings was indicted in March 2016 along with Ross
McLellan, a former State Street executive v.p. and head of the
banks broker-dealer. Prosecutors alleged that the State
Street executives were adding secret commissions to trades of
at least six clients. McLellan and Pennings then
allegedly took steps to hide the commissions from the clients
and others within the bank, including compliance staff,
the DOJ said in its April 2016 announcement of the
McLellan pleaded not guilty in April 2016, the Boston Globe reported at the time.
The secret conversations and backroom plotting laid
bare in todays charges paint a vivid picture of a brazen
fraud, said Carmen M. Ortiz, U.S. attorney for
Massachusetts, in the DOJ statement.
In July, the SEC announced that State Street agreed to pay
$382.4 million in a global settlement for misleading mutual
funds and other custody clients by applying hidden markups to
foreign currency exchange trades. The firm
also settled with British regulators, paying $38 million over
the matter in 2014.