Ex-State Street Executive Found Guilty of Fraud

After less than two days of deliberation, a federal jury in Boston has convicted Ross McLellan, the former State Street executive charged with fraud for double-charging clients. 

On Tuesday the jury found McLellan guilty of five of six counts of wire fraud, securities fraud and conspiracy to commit those crimes 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. 

The news comes after roughly three weeks of trial. Closing arguments were held on Monday in Boston. McLellan’s sentencing has been scheduled by U.S. District Judge Leo Sorokin for October 10. 

[II Deep Dive: Former State Street Exec Heads to Trial]

McLellan, once an executive vice president at State Street, is the latest in a string of former executives held responsible for the fraud. Two of his former employees, Edward Pennings and Richard Boumgaardt, earlier pleaded guilty to conspiring to commit wire fraud and securities fraud.

The group allegedly secretly charged commissions on trades, then did what they could to hide the fact from clients.

Those affected by the scheme include the United Kingdom’s Royal Mail Pension Plan, the Kuwait Investment Authority, and Ireland’s National Pension Reserve Fund. 

In 2017, State Street was hit with a $64.6 million fine, which the company paid in full to the Department of Justice and the Securities and Exchange Commission for the scheme. The company has disclosed the issue in public filings since 2012.

McLellan and Pennings left State Street in 2011. McLellan was arrested in 2016 at his Hingham, Massachusetts home.