Legal action against State StreetWhat State Street says... The bank was at the forefront of custody’s metamorphosis from sleepy backwater to active asset management industry, but the past couple of years have exposed sloppy investment practices that have cost both money and reputation. The search is on for new fee revenue to support the colossus the bank has become. Louise Bowman reports.IF ONE LESSON should be learned from the financial crisis of recent years it is this: understand counterparty risk. If you are on the other side of the table from an entity that has nearly $19 trillion of assets under custody and nearly $2 trillion of assets under management, it is important to understand exactly what the risk is. That counterparty is State Street, the Boston-based custody market colossus and subject of growing speculation as to whether its size and reach represent a risk that the wider market should...
