{"id":1175,"date":"2025-06-27T13:52:42","date_gmt":"2025-06-27T13:52:42","guid":{"rendered":"https:\/\/tcap.blog\/?p=1175"},"modified":"2025-06-27T13:52:43","modified_gmt":"2025-06-27T13:52:43","slug":"shareholder-spotlight-state-street-scum","status":"publish","type":"post","link":"https:\/\/tcap.blog\/2025\/06\/27\/shareholder-spotlight-state-street-scum\/","title":{"rendered":"Shareholder Spotlight : State Street Scum"},"content":{"rendered":"\n
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In Boston\u2019s financial district the glass towers of State Street loom large \u2013 shiny fa\u00e7ades hiding a cesspit of greed. Managing over US $4.7 trillion in assets and US $46.6 trillion in custody, the firm\u2019s scale makes its repeated scandals all the more shocking. Below are five major episodes of misconduct \u2013 then we\u2019ll show how this reflects on Cummins, where State Street held approximately a 4.6 percent stake (as of March 2025).<\/p>\n\n\n\n

Overcharging Racket<\/strong><\/h2>\n\n\n\n

Between 1998 and 2015, State Street defrauded its custody clients of more than US $290 million by secretly marking up out-of-pocket expenses. In May 2021 they entered a Deferred Prosecution Agreement, paying a US $115 million criminal penalty \u2013 yet kept most of the illicit gains as a \u2018cost of doing business\u2019.<\/p>\n\n\n\n

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Secret Commissions<\/strong><\/h2>\n\n\n\n

In January 2017, the Department of Justice and SEC revealed State Street had been pocketing undisclosed commissions on billions of dollars in trades. They settled criminal charges for US $64 million and collateral civil fines \u2013 yet the practice spanned years of client betrayal.<\/p>\n\n\n\n

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Hidden Transition-Management Fees<\/strong><\/h2>\n\n\n\n

On 7 September 2017, the SEC charged State Street with fraudulently adding secret mark-ups on transition-management services \u2013 generating roughly US $20 million in improper revenue. The firm agreed to pay US $35 million in penalties and disgorgement, all while describing it as an \u2018inadvertent\u2019 error.<\/p>\n\n\n\n

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Sanctions Evasion by Charles River Subsidiary<\/strong><\/h2>\n\n\n\n

In July 2024, OFAC fined State Street\u2019s Charles River technology arm US $7.45 million for 38 apparent violations of Russia\/Ukraine sanctions \u2013 including re-dating invoices and accepting prohibited payments between 2016 and 2020.<\/p>\n\n\n\n

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Coal-Market Collusion Lawsuit<\/strong><\/h2>\n\n\n\n

In November 2024, Texas Attorney General Ken Paxton sued BlackRock, State Street and Vanguard for \u201cconspiring to rig the coal market\u201d by using their shareholdings to force down coal output \u2013 alleging antitrust breaches under federal and state law.<\/p>\n\n\n\n

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The Cummins Connection<\/strong><\/h2>\n\n\n\n

State Street holds a big piece of Cummins Inc (CMI). Cummins itself has faced major penalties:<\/p>\n\n\n\n