State Street Corporation, known as State Street, is an American worldwide financial services company. State Street was founded in 1792 and is the second oldest financial institution in the United States of America. It is one of the largest asset management companies in the world with $2.78 trillion (USD) under management and $33.12 trillion (USD) under custody and administration, which represents 11% of the world's total financial assets. State Street is a Fortune 500 company with headquarters at One Lincoln Street in Boston and has offices in 30 countries around the world. At the 2011 G20 Summit in Cannes, France heads of governments/heads of states gathered to discuss the stability of worldwide financial markets. At the G20, State Street was adjudged one of the 29 top systemic financial institutions in the world too crucial to fail, which were deemed critically important to the health of the Global Economy.
State Street is organized into 2 divisions: Investment Servicing and Investment Management. The State Street Bank and Trust Company (Global Services) business is a custodian bank. The State Street Global Advisors (Global Advisors) business provides investment management services including investment research and trading services to institutional investors.
The company is named after State Street in Boston, which was known as the "Great Street to the Sea" in the 18th century as Boston became a flourishing maritime capital. The company's logo includes a clipper to reflect the maritime industry in Boston during this period.
Video State Street Corporation
History
State Street's past can be dated back to the founding years of Boston's banking industry. In 1792, the Union Bank became the 3rd bank to be chartered in Boston and was located at the corner of State and Exchange Streets.
In 1865, the Union Bank received a national charter and became the National Union Bank of Boston. State Street Deposit & Trust Co opened alongside National Union in 1891. It became the custodian of the first US mutual fund in 1924, the Massachusetts Investors Trust (now MFS Investment Management). State Street and National Union merged in 1925.
State Street's growth during the mid-1900s was fueled by mergers and acquisitions. It merged with the Second National Bank in 1955 and with the Rockland-Atlas National Bank in 1961. William Edgerly gained control in 1975 and shifted the company's strategy from commercial banking to investments and securities processing.
The company began investing heavily in technologies for securities management and custodian processing. It was helped by a partial acquisition of Boston Financial Data Services in 1973. More than 100 top staff from IBM were hired by State Street as it set about implementing IBM mainframe computer systems.
State Street's new building was completed in 1966 and became the first high-rise office tower in downtown Boston. In 1972 the company opened its first international office in Munich. For much of the 1980s and 1990s it expanded to foreign markets with offices in Montreal, Toronto, Dublin, London, Paris, Dubai, Sydney, Wellington, Hong Kong, and Tokyo.
In early 1990s State Street brought its technology platform to international markets. By 1992, most of State Street's revenue came from fees for holding securities, settling trades, keeping records, and performing accounting. It formed State Street Global Advisors, a global asset management business in 1994. In 1999, it sold its retail and commercial banking businesses to Citizens Financial Group.
In 1995, the company acquired Investors Fiduciary Trust of Kansas City for $162 million from DST Systems and Kemper Financial Services.
In 2002, State Street Bank Luxembourg was founded, and is today the largest player in the country's fund industry by assets. In 2003 it purchased Deutsche Bank's securities services division for $1.5 billion.
In July 2007, the company acquired Investors Bank & Trust for $4.5 billion.
In 2010, it acquired Mourant International Finance Administration and the securities services group of Intesa Sanpaolo.
In December 2010, the company announced that it would be retrenching 5% of its workforce and effectively reducing the wages of remaining employees by 10%.
In November 2011, State Street was named by the G-20 as amongst the world's 29 systemic banks and must meet all conditions of the Basel III accord.
In 2016, State Street formally launched a program called Beacon, focused on digitizing the operations of the company and performing work, such as net asset value calculation, faster than before.
In 2017, the company announced that Jay Hooley, the chief executive officer of the company, would retire.
Maps State Street Corporation
Organization
State Street Global Advisors
State Street Global Advisors is the company's asset management business and dates back to 1978. It provides investment management, research, and advisory services to corporations, mutual funds, insurance companies, and other institutional investors.Global Advisors develops both passive and active management strategies using both quantitative and fundamental approaches.
It created the first exchange-traded fund in 1993, the SPDR S&P 500, and is now one of the world's largest ETF providers.
In November 2014, State Street Global Advisors sold SSARIS to senior management.
State Street Global Markets
Global Markets is State Street's securities business. It offers research, trading, and securities lending services for foreign exchange, equities, fixed income, and derivatives. The company claims to be a trading partner free from conflicted interests as it does not run proprietary trading books. Global Markets maintains trading desks in Boston, London, Sydney, Toronto, and Tokyo.
State Street Global Services
Global Services is the investment servicing division of State Street, also known as the State Street Bank and Trust Company. It provides asset owners and managers with Custodian bank services (safekeeping, corporate actions), fund accounting (pricing and valuation), and administration (financial reporting, tax, compliance, and legal) services.
Global Services handles assets from many classes, including equities, derivatives, exchange-traded funds, fixed income assets, private equity, and real estate. State Street administers 40% of the assets under administration in the US mutual fund market. Global Services also provides outsourcing for operations activities and handles $10.2 trillion (USD) of middle-office assets.
State Street Global Exchange
Global Exchange helps asset owners and managers decide a strategy and put it into action. It offers research and advice and data management and analytics to manage risk.
Regulation
State Street is registered with the Board of Governors of the Federal Reserve System as a bank holding company pursuant to the Bank Holding Company Act of 1956. It is a member of the Federal Reserve System and its deposits are insured by the Federal Deposit Insurance Corporation. Certain aspects of State Street's public disclosure are subject to the requirements of the Sarbanes-Oxley Act of 2002.
State Street's broker-dealer operation, known as Global Markets, is registered with and regulated by the Securities and Exchange Commission and the New York Stock Exchange in the United States. The Prudential Regulation Authority and the London Stock Exchange regulate State Street in the United Kingdom.
Controversies
Currency trade fraud
In 2009, California alleged on behalf of its pension funds CalPERS and CalSTRS that State Street had committed fraud on currency trades handled by the custodian bank. In October 2011, two executives from State Street Global Markets left the company following charges over the pricing of a fixed income transaction. In April 2016, they were charged by the United States Department of Justice.
Non-disclosure of short position
On February 28, 2012, State Street Global Advisors entered into a consent order with the Massachusetts Securities Division. The Division was investigating SSGA's role as the investment manager of a $1.65 billion (USD) hybrid collateralized debt obligation. The investigation resulted in a fine of $5 million (USD) for the non-disclosure of certain initial investors taking a short position on portions of the CDO.
During the May 2012 annual shareholders meeting, chairman and chief executive Jay Hooley was shouted down on numerous occasions by protesters in relation to the outsourcing and other grievances.
Secret commissions
On January 18, 2017, State Street agreed to pay $64.6 million to resolve U.S. investigations into what prosecutors said was a scheme to defraud six clients through secret commissions on billions of dollars of trades.
Fearless Girl statue
In March 2017, State Street Global Advisors commissioned a statue called Fearless Girl by Kristen Visbal and placed it temporarily in the Financial District, Manhattan, in front of the Wall Street icon Charging Bull. The statue is an advertisement for an index fund which comprises gender diverse companies that have a higher percentage of women among their senior leadership. While some have seen it as an encouragement of women in business, some women criticized the statue as "corporate feminism" that violated their own feminist principles. Ironically, in October 2017, the company paid $5 million to settle a lawsuit charging that it had paid certain female and African-American executives less than their male and European-American peers.
See also
State Street Bank v. Signature Financial Group is the landmark case in which the Court of Appeals for the Federal Circuit ruled (23 July 1998) that a computer algorithm can be patented to the extent that it produces "a useful, concrete and tangible result".
References
External links
Archives and records
- State Street Bank records at Baker Library Special Collections, Harvard Business School.
Media
- Emily Rooney, "State Street Outsourcing", Greater Boston, WGBH-TV Boston, Thursday, July 19, 2012
Source of article : Wikipedia
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