JAPAN – Japan’s market regulator has barred State Street’s local trust arm from seeking new business for a month for a series of governance and compliance infringements.

“Operations for engaging in a new trust business associated with the management of trust assets must be suspended from February 2006 to March 5 2006 (excluding business with existing customers),” the Financial Services Agency said, referring to State Street Trust and Banking Co.

The unit is one of six State Street companies in the country. The sanction did not include a fine.

The action, following an 11-month on-site probe at the bank, states that the bank violates trust law “as a result of many years of lax administration and operations” amid a “lack of oversight and control y the top management”.

The bank, it said, had provided “misleading” documents to clients. It said “proper governance and compliance systems” must be established.

A State Street spokeswoman said the action just covered its trust business and not custody or outsourcing and that no clients have been impacted. “We intend to fully comply with their recommendations,” she said.

The FSA said the unit made “basic violations of laws and regulations and breach of trust of customers” and that information was shared internally.

Michael Wilson took over as president and chief executive of State Street’s businesses in Japan on June 24. State Street set up operations in Japan in 1990 and has around 350 staff.

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