July 16, 2018/US SEC
On June 26, 2018, a jury in federal court in Boston, Massachusetts, convicted Ross McLellan, a former State Street Corp. executive, of engaging in a scheme to defraud customers of State Street’s Transition Management line of business. McLellan was found guilty of applying secret commissions to billions of dollars of securities trades executed on behalf of these customers.
The criminal conviction is based on substantially the same conduct alleged in a parallel enforcement action brought by the SEC. The SEC’s complaint against McLellan, which was filed on May 13, 2016 in federal court in Boston, charges McLellan with violating Section 17(a) of the Securities Act of 1933 and aiding and abetting violations by others at State Street of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The SEC’s complaint alleges that between February 2010 and September 2011 McLellan led a scheme to add secret commissions to securities trades performed for at least six clients of State Street’s “transition management” business, which helps institutional clients to move their investments between asset managers or to otherwise restructure large investment portfolios. The complaint further alleges that these commissions were charged in addition to fees the clients had expressly agreed to pay the bank, and that McLellan took steps to conceal the commissions from the clients and others within State Street.
The SEC’s litigation continues.
For further information, see Lit. Release No. 23540 (May 13, 2016).