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State Street Bank & Trust Company might have violated federal law by representing that its fixed income bond funds were conservative investments, yet then lost 40% of the assets by investing in sub prime mortgage securities.
Investigation Source
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Investments
- Unsuitable Investments
- Retirement Asset
- Investment Advisor Duties
Product or Service
- Mutual Funds
Injury Type
- Monetary Loss
Investigation Details
Investigation and pending consolidated class action lawsuit against alleges State Street Bank and Trust Company and its affiliate, State Street Global Advisors, Inc., (collectively, "State Street").
State Street is the investment advisor and mananager of the following unregistered, fixed income bond funds:
Intermediate Bond Fund For Employee Trusts
Ssga Enhanced Intermediate Bond Fund
Daily Bond Market Fund
Core Intermediate Credit Bond Fund
Daily Corporate/Government Bond Fund
Ssga Yield Plus Fund
Total Bond Market Fund
Ssga Bond Market Fund
Limited Duration Bond Fund
State Street represented that these bond funds were conservative, risk-adverse mutual funds. In fact, State Street invested the assets of these funds in high-risk subprime mortgage-backed securities and other exotic financial instruments. The class action lawsuit alleges that in many instances the losses resulting from those imprudent investments were multiplied as a result of State Street's use of leverage to further increase the size of its risky bets on mortgage-backed and other exotic securities.
As a result of State Street's imprudent investments, these bond funds managed by State Street - funds whose investment objective was simply to meet or modestly exceed the returns of well-established fixed income benchmark indices - lost up to 40% of their value when the market for subprime mortgage-backed securities collapsed in August 2007.
As the Investment Manager for these Bond Funds, State Street may be liable under federal law for the losses caused by its imprudent management of the Bond Funds.
State Street is the investment advisor and mananager of the following unregistered, fixed income bond funds:
Intermediate Bond Fund For Employee Trusts
Ssga Enhanced Intermediate Bond Fund
Daily Bond Market Fund
Core Intermediate Credit Bond Fund
Daily Corporate/Government Bond Fund
Ssga Yield Plus Fund
Total Bond Market Fund
Ssga Bond Market Fund
Limited Duration Bond Fund
State Street represented that these bond funds were conservative, risk-adverse mutual funds. In fact, State Street invested the assets of these funds in high-risk subprime mortgage-backed securities and other exotic financial instruments. The class action lawsuit alleges that in many instances the losses resulting from those imprudent investments were multiplied as a result of State Street's use of leverage to further increase the size of its risky bets on mortgage-backed and other exotic securities.
As a result of State Street's imprudent investments, these bond funds managed by State Street - funds whose investment objective was simply to meet or modestly exceed the returns of well-established fixed income benchmark indices - lost up to 40% of their value when the market for subprime mortgage-backed securities collapsed in August 2007.
As the Investment Manager for these Bond Funds, State Street may be liable under federal law for the losses caused by its imprudent management of the Bond Funds.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| State Street Corporation (STT) | State Street Corporation, through its subsidiaries, provides a range of financial and investment products and services for the institutional investors worldwide. |