"State Street says legal exposure may be larger" writes The Boston Globe. It says, "In a regulatory filing today State Street said it may need to set aside more money to settle investigations by federal and state regulators over how it handled its clients' investments. In June, State Street said the staff of the US Securities and Exchange Commission had notified the company it was was considering bringing civil charges against the bank. The US investigation appears to center on whether State Street misled clients about the safety of some bond funds that were pitched to pension funds and other institutional investors as conservative investments, but instead sustained losses from subprime mortgage exposure.... State Street has also been sued by investors who claimed the company promised that some of of its fixed income funds would offer stable, predictable returns, with only slightly more risk than ultrasafe money market mutual funds. But the funds racked up large losses after placing riskier bets in mortgage-backed securities, home-equity loans and other investments."
