State Street Bank and Trust Company Pays $12 Million to Settle Charges

Securities Fraud LawyersAccording 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.”

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