State Street Corp. fined over CDO Role

Wednesday, April 4th, 2012

According to reports, the Massachusetts Secretary of State has fined a unit of State Street Corp. $5 million for its role in a mortgage-backed debt obligation.

State Street is a Boston-based financial services company registered with FINRA. According to Secretary of State’s office, State Street Global Advisors failed to disclose a hedge-fund’s involvement in a $1.56 billion collateralized debt obligation known as Carina CDO Ltd. State Street purportedly acted as the investment manager of Carina.

Apparently the Carina CDO consisted primarily of mortgage-backed securities and subsequently defaulted.

The settlement order censures State Street and requires it to pay a civil administrative penalty of about $1.4 million to the Commonwealth of Massachusetts and to disgorge to the Commonwealth an additional $3.5 million.

Collateralized debt obligations (CDOs) are a type of structured asset-backed securities with multiple risk “tranches” that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. With the real estate market collapse in 2008, many of these investments plummeted and investors lost billions.

If you have questions about a CDO investment you purchased, the securities attorneys of The White Law Group may be able to help.  For a free consultation, please call the firm’s Chicago office at 312/238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

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