State Street sued over sub-prime saga
GLOBAL - State Street says it is "disappointed" by the three lawsuits its faces from a number of its fixed-income clients, over losses linked to the recent sub-prime credit crunch.
A spokeswoman told IPE the group is adamant it managed its fixed-income strategies "consistent with stated investment objectives".
However, the group is currently facing three lawsuits from institutional investors over its management of bond funds, as plaintiffs argue they have been misled about the strategy.
Investments are said to have been touted for their conservative approach, though eventually posted losses during the summer because of investments linked to the sub-prime mortgage crisis.
"The events in he fixed-income markets over the summer were unprecedented. We intend to defend ourselves against these complaints," State Street said.
Elsewhere, it is believed the US watchdog Securities and Exchange Commission (SEC) is investigating whether senior Merrill Lynch executives knew more than they revealed to investors about the value of the firm's sub-prime -related investments.
This news comes after Merrill Lynch chief executive officer, Stan O'Neal announced his retirement yesterday.
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