It appears lawmakers and regulators are going to make sure one of the alleged primary causes of the economic crisis, speculation, is also part of the solution and clean up efforts. As the countdown to the next 10 people to be taken away in handcuffs for insider trading continues and speculation runs rampant, the institutional version of the whodunit perp walk is over in California. One day after the state's attorney general, Jerry Brown, announced that a " major institutional bank" was going to receive a $200 million legal surprise due to some of their dealings with CalPERS and CalSTRS, the grand prize winner was announced today. Brown singled out State Streets efforts allegedly overcharging the two pension funds over the past 8 years in the award presentation ceremony.
The suit, which was unsealed Tuesday by a Sacramento Superior Court judge, contends that Boston-based State Street illegally overcharged CalPERS and CalSTRS for the costs of executing foreign currency trades since 2001.
"Over a period of eight years, State Street bankers committed unconscionable fraud by misappropriating millions of dollars that rightfully belonged to California's public pension funds," Brown said. "This is just the latest example of how clever financial traders violate laws and rip off the public trust."
This was the first nomination for State Street for a California pension fund lawsuit.