State Street Deferred Prosecution Agreement

The State Street Corporation, one of the largest banks in the United States, entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice (DOJ) in January 2017. The agreement was reached after the bank was found to have engaged in fraudulent activities that violated federal securities laws and regulations.

The DPA requires State Street to pay a $64.6 million penalty and admit to its wrongdoing. The bank is also required to implement significant changes to its compliance program, including improving its internal controls, training its employees on regulatory compliance, and enhancing its risk management systems.

The fraudulent activities that State Street engaged in included overcharging its customers for certain foreign currency exchange transactions. The bank would charge its customers a higher rate than the one that was agreed upon, pocketing the difference for itself. State Street also misled its clients about the way it calculated certain fees, resulting in some customers being charged more than they were supposed to.

The DOJ’s investigation into State Street’s activities began in 2014, after the bank was sued by the Commonwealth of Massachusetts for similar abuses. The DOJ found that State Street’s fraudulent activities were widespread, affecting customers in the United States and around the world.

The DPA is a significant development in the effort to hold banks accountable for fraudulent activities. It allows the DOJ to defer the prosecution of a company if it meets certain conditions, such as admitting to wrongdoing and implementing significant changes to its business practices. In exchange, the DOJ agrees to drop the charges against the company at the end of the DPA period if the company meets all the requirements.

State Street’s DPA is a clear indication that no company, no matter how large or powerful, is above the law. The bank’s fraudulent activities harmed its customers and damaged the integrity of the financial system. The penalty that State Street has agreed to pay is significant and will hopefully send a message to other banks that engaging in fraudulent activities will not be tolerated.

In conclusion, the State Street Deferred Prosecution Agreement is an important development in the fight against financial fraud. The DOJ’s investigation into State Street’s activities demonstrates the need for increased oversight and accountability in the banking industry. By holding companies accountable for their actions and imposing significant penalties, the DOJ can help to restore trust and confidence in the financial system.