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Cohen Milstein's investigation is based upon a recently unsealed Qui Tam action filed in California Superior Court by a private plaintiff (or relator) alleging that State Street engaged in an extensive multi-year scheme to defraud pension fund clients, including California's two largest pension plans, CalPERS and CalSTRS, by charging "false or inflated foreign exchange (F/X) rates for international security transactions." A Qui Tam action is one brought under a statute that allows a private person to sue for a penalty, part of which the government or some specified public institution will receive.
According to the allegations in the Qui Tam complaint State Street carried out its fraudulent scheme by executing foreign exchange transactions requested early in the day at the rate available at that time, and then watching market fluctuation over the course of the day in order to charge the clients a different rate than the one at which State Street actually settled the transaction. If the transaction was a purchase of a foreign security, State Street would charge a higher foreign exchange rate available later in the day, thus causing the client to pay more than what State Street actually paid. If the transaction was a sale of a foreign security, State Street would charge a lower foreign exchange rate available later in the day, thus remitting to the client an amount less than what State Street actually received. "Either way, [State Street] pocketed the difference between the actual rates and the 'hypothetical' rates charged to the clients."
The Attorney General for the State of California has also recently filed a similar complaint asserting similar claims against State Street and seeking treble damages and civil penalties.
If you are pension plan or the fiduciary of a pension plan for whom State Street has provided foreign exchange services within the past ten years and believe you may have suffered losses as a result of State Street's foreign exchange practices, please contact attorneys Bruce Rinaldi, Marc Machiz or R. Joseph Barton toll free at (888) 240-0775.
Cohen Milstein is one of the leading plaintiffs ERISA and pension fund litigation firms in the United States. The Employee Benefits practice area at Cohen Milstein is led by Marc I. Machiz, who served as the chief employee benefits lawyer at the United States Department of Labor prior to joining the firm in 2000. Cohen Milstein has successfully litigated a wide variety of class actions on behalf of the pension plans to restore assets to pension plans and protect the retirement benefits of plan participants. Prior results do not guarantee a similar outcome. For more information, visit www.cohenmilstein.com.
SOURCE Cohen Milstein
http://www.cohenmilstein.com/
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