A former State Street employee stands accused by the Securities and Exchange Commission (SEC) of engaging in a $20m (€17.6m) fraud of transition management customers, including Ireland’s sovereign wealth fund.

Ross McLellan, former global head of State Street’s portfolio solutions group, is alleged to have overseen activity that saw the firm’s clients charged “hidden mark-ups” on certain transactions.

Along with two other unnamed employees within State Street – one a senior EMEA managing director based in the Netherlands at the time, the other the UK-based head of the EMEA transition management desk – McLellan misrepresented the company’s charges, producing false trading statements and post-trade reporting, the SEC alleges.

“When McLellan and the State Street Co-Schemers were ultimately confronted by a customer that had detected some of the hidden mark-ups,” argues the US regulator’s court filing, presented to the district court of Massachusetts, “McLellan aided and abetted others at State Street who made materially false and misleading statements to that customer to conceal the scheme to take hidden mark-ups.”

The SEC alleges that the activity resulted in $20m in additional revenue for State Street – $9.7m of which came from two unnamed Middle Eastern sovereign wealth funds.

The filing also details the $3.7m in additional charges billed to the National Pensions Reserve Fund (NPRF), the Irish sovereign wealth fund before it was restructured into the Ireland Strategic Investment Fund.

State Street returned the additional charges to the NPRF in 2012 and was eventually dropped as a provider by the sovereign fund after the UK’s Financial Conduct Authority fined State Street’s local transition management business £23m (€27.9m).

Other affected clients at the time are believed to include the pension fund for workers of the UK’s Royal Mail, referred to in the SEC filing as a “British Postal company”, a second Irish client, and a €1.6bn transition in the Netherlands for two unnamed pension funds.

The SEC’s filing comes weeks after McLellan was charged with fraud by the US Department of Justice in April.