Britain's financial watchdog fined State Street U.K. 22.9 million pounds ($38 million) for deliberately overcharging its clients, and said the custody bank acted with "complete disregard" for the interests of its customers.
The fine is one of the largest dished out by the watchdog in recent years, and the latest where financial firms have been found to put profit before the interest of their customers.
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A logo sits on a sign in the reception area of the headquarters of the Financial Conduct Authority (FCA) in the Canary Wharf business district in London, U.K.Chris Ratcliffe | Bloomberg via Getty Images
Between June 2010 and September 2011, State Street U.K., a unit of the world's second-largest standalone custody bank State Street Corp, overcharged six clients a total of $20.2 million, the Financial Conduct Authority (FCA) said.
Those clients included large investment management firms and pension funds holding the funds and savings of retail investors. Custody banks manage cash for companies and handle back-office processing of securities and banking transactions for fund managers.
The FCA said the firm had developed and executed a deliberate strategy to charge substantial mark-ups on agreed fees. The overcharging contributed over a quarter of revenues at the business unit responsible for the failings.
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The overcharging was also concealed from clients, the FCA said, and only came to light after one discovered the mark-ups on certain trades that had not been agreed and notified State Street staff.
"The findings we publish today are another example of a firm that has acted