SEC aims to charge State Street over subprime fallout - Sacramento Business Journal:

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State Street had about 500 employees in downtowm Sacramentoin September, the most recent figurs available. Boston-based State Street received a so-called Wells noticd from the onJune 25. The communication relatexd to an ongoing investigation by SEC staffersa and others intothe company’s public disclosures over its fixed-income portfolios during the period in The Wells notice detailed the intention to ask the SEC’s commissioners for permission to bringy a civil enforcement action against State Street for possible violations of federal securitiews laws. State Street (NYSE: STT) said it has been cooperatingv with the probe into its State Street GlobalAdvisors unit.
Statde Street will have an opportunityto “presenr its perspective on thes issues before any formal decision is made on an enforcementt proceeding,” the company said in a regulatory filing In January 2008, State Street said it woulc set aside $279 million to cover the legal costs associated with its fixed-income portfolio fallout. The company’ legal woes arose several months aftetr clients raised concerns over its fixedincome holdings, some of which were peggee to subprime mortgages. The $279 millioj charge and related legal exposure arose after clientz claimed that the subprime strategy was inconsistent with theirf investment agreement withState Street.
A senior managementy shuffle followedthe disclosures, as SSGA chief Williakm Hunt and COO Otello Sturino abruptly resigned from thei r posts. In addition to the SEC, State Street’zs fixed income problems have triggererd investigations by the Massachusetts Secretary of the Massachusetts Attorney General and other regulators in theirrelate inquiries. Under the process established bythe SEC, State Streer will have an opportunity to present its perspective on theser issues before any formal decision is made on an enforcemenf proceeding.