According to the Securities and Exchange Commission, State Street Bank
and Trust Company has agreed to pay $12 million in order to settle charges
brought by the Commission. The charges claim that State Street Bank and
Trust Company and the man who headed the company’s public funds
group, Vincent DeBaggis, allegedly conducted a pay-to-play scheme. They
are accused of hiring lobbyists to win contracts that would allow them
to service pension funds in Ohio.
DeBaggis allegedly agreed to pay Ohio’s then-deputy treasurer in
cash and contributions to the political campaign in order to receive contracts
that would protect certain funds’ investments and effect settlements
of securities transactions. According to the SEC, DeBaggis settled charges
by paying a penalty of $100,000 and disgorgement and prejudgment interest
fees of $174,202.81.
Andrew J. Ceresney, Director of the SEC’s Enforcement Division, made
the following comment,
“Pension fund contracts cannot be obtained on the basis of illicit
political contributions and improper payoffs. DeBaggis corruptly influenced
the steering of pension fund custody contracts to State Street through
bribes and campaign donations.”
The SEC also alleged participation in the scheme by Robert Crowe, a partner
at a law firm who was a lobbyist and helped fundraise for State Street.
He allegedly entered into undisclosed agreements in order to make secret,
illegal contributions to the campaign and in turn, obtain and retain any
business awarded to State Street.
David Glockner, Director of the SEC’s Chicago Regional Office, said,
“Our complaint alleges that Crowe served as a conduit for corrupt
payments from State Street to influence decisions about public pension
fund service contracts. Pay-to-play schemes are intolerable, and lobbyists
and their clients should understand that the SEC will be aggressive in
holding participants accountable.”