Regulators: ‘Dishonest’ State Street Has Been Overbilling Customers Millions

Photo (Cropped) by Dale Cruse on Flickr/Creative Commons

State regulators torched State Street for “dishonest” business practices, including routinely overbilling customers millions of dollars.

In an administrative complaint, Secretary of the Commonwealth Bill Galvin charged State Street Global Markets LLC, a unit of the Boston-based financial services firm, with incorrectly invoicing clients for two decades, the Boston Business Journal reports. State Street has previously acknowledged that this practice cost its customers $240 million.

“My office has the authority to proceed against a registered broker-dealer if its control person has engaged in dishonest and unethical activity in the securities business,” Galvin said in a statement. “That is exactly what we have here, and public policy dictates we act to stop it.”

Galvin says State Street didn’t fully disclose the extent of its overbilling. Internal emails from 2009 included in his complaint reveal State Street was charging clients $5 for sending electronic payment messages, though it only cost the company 25 cents. One employee called it “an exorbitant mark-up that will certainly piss off clients when they figure this out,” while another said they were “taking [clients] to the cleaners.”

A spokesperson for State Street told the BBJ it would soon issue a statement on Galvin’s complaint.