According to a press release dated December 19, 2009, the Complaint charges State Street and certain of the Company’s executive officers with violations of federal securities laws. State Street is a provider of financial services to institutional investors including investment servicing, investment management, and investment research and trading. The Complaint alleges that throughout the Class Period defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations and prospects. Specifically, defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company set up a scheme to substantially mark up foreign currency trades; (2) that such scheme caused State Street’s clients to overpay for such trades; (3) that the scheme allowed the Company to reap illegal profits; (4) that, as a result, the Company’s financial results were materially inflated; (5) that the Company's financial results were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); and (6), that the Company lacked adequate internal and financial controls.
On October 20, 2009, California Attorney General Edmund G. Brown Jr., announced that he had filed suit against State Street alleging the Company committed “unconscionable fraud” against California's two largest pension funds – California Public Employees’ Retirement System (“CalPERS”) and California State Teachers’ Retirement System (“CalSTRS”) – and “illegally overcharged CalPERS and CalSTRS for the costs of executing foreign currency trades since 2001.”
On this news, shares of State Street declined $4.41 per share, nearly 8.5%, to close on October 20, 2009, at $47.84 per share, on unusually heavy volume.
On May 7, 2010, Judge Nancy Gertner consolidated three related actions under Lead Case, 1:09-cv-12146-NG; appointed Public Employees’ Retirement System of
Mississippi, Union Asset Management Holding AG as Lead Plaintiffs; and approved Lead Plaintiffs selection of Berman DeValerio Pease Tabacco Burt & Pucillo, Bernstein Litowitz Berger & Grossmann, and Motley Rice as Lead Counsel in the Consolidated Actions. On June 25, 2010, the lead plaintiff filed a Consolidated Class Action Complaint, adding the company directors, underwriters and auditor as named defendants in violation Sections 11, 12 and 15 of the Securities Act. On June 28, 2010, a First Amended Complaint was filed, related to the ERISA Action, docket number 10-CV-10184. On July 29, 2010, the lead plaintiff filed a Consolidated Amended Class Action Complaint.
On September 24, 2010, the defendants filed several motions to dismiss the Consolidated Amended Class Action Complaint. The motions were denied on August 3, 2011.
On July 8, 2014, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on July 21. On January 8, 2015, the Court issued a Final Judgment granting approval of the Settlement and ordering this case dismissed with prejudice. Certain parties are appealing this Judgment.