18-Month Prison Sentence for Former State Street Exec
Ross McLellan had been found guilty of defrauding institutional clients, including Irish and British pension funds.
Prosecutors had asked for five years, the newswire said, while attorneys for McLellan argued for a one-year sentence.
A federal jury had found McLellan guilty on five of six counts of wire fraud, securities fraud, and conspiracy to commit those crimes in June, almost seven years after he — along with other members of the bank’s transition management team — agreed to mislead institutional clients about the services they were paying for.
[II Deep Dive: Ex-State Street Executive Found Guilty of Fraud]
Transition management involves moving often vast sums of money and assets from one place to another when, for instance, a pension fund decides to cash out of one money manager in favor of another. It is traditionally a low-margin service performed by custody banks for existing institutional clients.
Two of McLellan’s former employees, Edward Pennings and Richard Boumgaardt, earlier pleaded guilty to conspiring to commit wire fraud and securities fraud.
The group allegedly charged secret commissions on trades, then did what they could to hide those commissions from clients.
Those affected by the scheme included the United Kingdom’s Royal Mail Pension Plan, the Kuwait Investment Authority, and Ireland’s National Pension Reserve Fund.
“The issue here is you can’t lie,” U.S. District judge Leo Sorokin told McLellan at Tuesday’s sentencing, according to Reuters. “Truth matters. You can’t tell people you’re going to charge one thing and charge another.”
A spokesperson for State Street declined to comment beyond earlier statements.