The Wall Street Journal reported that State Street is finalizing a settlement with the DOJ, SEC and Labor Department (due to ERISA clients), as well as lawsuits filed on behalf of investors including CalPERS and CalSTRS pension funds. The dollar amount is expected to exceed $500 million (BNY Mellon settled a similar suit last year for over $700 million). The suit involves standing instruction trades - custody FX trades executed automatically based upon an agreement with the customer. The lawsuit charges that while the bank promised to execute these trades at market prices, there were undisclosed markups in the rates provided to clients.
These charges were different and preceded the FX benchmark manipulation charges and lawsuits, to which State Street was not a part. Here the State Street charges were that the bank contractually agreed to provide market prices but instead provided clients with worse rates. The charges only relate to standing instruction trades, typically used for "smaller" FX trades by the custody clients of banks.
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