California's attorney general, Jerry Brown, said Tuesday that he was suing State Street, the large Boston-based bank, accusing it of committing "unconscionable fraud" against the state's two largest employee pension funds, Calpers and Calstrs. Mr. Brown said he was seeing to recover more than $200 million in overcharges and penalties. Mr. Brown said that State Street overcharged the pension funds by adding a secret and substantial mark-up to the price of interbank foreign currency trades, totaling $56.6 million over eight years. The interbank rate is the price at which major banks buy and sell foreign currency. "Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Mr. Brown said in a statement. "This is just the latest example of how clever financial traders violate laws and rip off the public trust." State Street rejected Mr. Brown's assertions. "We categorically deny any allegations of wrongdoing and will defend ourselves against any litigation," a bank spokeswoman, Carolyn Cichon, said in an e-mail statement. Mr. Brown contended that although the bank was contractually obligated to charge the interbank rate to the pension funds at the precise time of the trade, State Street consistently charged at or near the highest rate of the day, even if the interbank rate was lower at the time of trade.
Mr. Brown said that State Street overcharged the pension funds by adding a secret and substantial mark-up to the price of interbank foreign currency trades, totaling $56.6 million over eight years. The interbank rate is the price at which major banks buy and sell foreign currency.
"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Mr. Brown said in a statement. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."
State Street rejected Mr. Brown's assertions. "We categorically deny any allegations of wrongdoing and will defend ourselves against any litigation," a bank spokeswoman, Carolyn Cichon, said in an e-mail statement.
Mr. Brown contended that although the bank was contractually obligated to charge the interbank rate to the pension funds at the precise time of the trade, State Street consistently charged at or near the highest rate of the day, even if the interbank rate was lower at the time of trade.
Zero Hedge has a column with the video and lots of comments. An atypical T&A show for CNBC with Michelle cast as expected, but modestly dressed, and Dennis Kneale cast as the ass, or perhaps he just seized the opportunity and made himself an ass. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
