Tags: SEC | Charges | Ex-State-Street | Workers | Subprime

SEC Charges Ex-State Street Workers Over Subprime

Thursday, 30 Sep 2010 02:22 PM

Two former State Street employees were charged by a top U.S. securities regulator with misleading investors about their exposure to subprime mortgage investments.

The U.S. Securities and Exchange Commission charged John Flannery and James Hopkins nearly eight months after State Street agreed to pay more than $300 million to settle related charges by the regulator.

According to the SEC, the defendants marketed State Street's Limited Duration Bond Fund as a safe alternative to money market funds, when by 2007 it was almost entirely invested in subprime mortgage-backed securities and derivatives.

Flannery was State Street's chief investment officer of the Americas before being fired in November 2007, while Hopkins was product engineer for the Limited Duration fund from 2004 to 2007, the SEC said. Hopkins in 2008 was promoted to head of product engineering for North America, it said.

Mark Pearlstein, a lawyer for Flannery said: "We are very disappointed" at the charges. He said his client "fully cooperated with the SEC's investigation, and the evidence will demonstrate that Mr. Flannery acted in complete good faith."

State Street and Hopkins' lawyer were not immediately available for comment.

Shares of State Street moved higher on the New York Stock Exchange on Thursday.

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Two former State Street employees were charged by a top U.S. securities regulator with misleading investors about their exposure to subprime mortgage investments. The U.S. Securities and Exchange Commission charged John Flannery and James Hopkins nearly eight months after...
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2010-22-30
Thursday, 30 Sep 2010 02:22 PM
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