Friday, March 21, 2008

State Street and the 50 States' Pension Plans

State Street's pay for play tactics in the 50 states are well-documented. Additional details will soon be forthcoming in the sttPolPals section.

With Pennsylvania*** about to hold a primary in which State Street's public pension plan pay for play tactics will be a factor, much more will be revealed here soon.

Public pension plan participants whose plans are managed and/or serviced by State Street may wish to demand fuller transparency into how your public officials selected State Street.

Especially given the catastrophic losses that have led many clients to bring class action lawsuits against State Street, many state plans will soon have to decide whether or not to seek recovery on behalf of their plan participants. Knowing that plan participants expect action, more state plans are likely to seek recovery.

The current management of State Street is clearly concerned that these ongoing lawsuits (and the attendant revelations of new facts regarding current management's practices) will bring about mass public pension plan client defections. In fact, State Street's own home state of Massachusetts recently terminated a contract with the company.

To attempt to combat the growing number of public pension plan defections, this month the company announced that it has hired two new slick marketing gurus to try to persuade public plans to stay put.

State Street Adds Another Two Executives to Growing Us Public Funds Team

BOSTON--(BUSINESS WIRE)--March 04, 2008 State Street Corporation (NYSE: STT), the world's leading provider of financial services to institutional investors, today announced two new appointments who will be responsible for continued outreach to the US public funds market. Mark Doherty has been appointed vice president of State Street's institutional investor sales team and Michael Pettit has been named vice president of client management.

Doherty, who will be based in New York, joins State Street from Northern Trust, where he was senior sales representative responsible for local and national government entities and insurance companies. Prior to this role, he was a senior sales representative and relationship manager with Bank of New York for more than three years.

Prior to joining State Street, Pettit was a senior relationship manager at Northern Trust covering public fund and Taft Hartley pension and health plans for more than four years. Previous to this role, he spent more than a decade with Bankers Trust/Deutsche Bank in the client services group. Pettit will be based in Los Angeles. ...

State Street is the leading provider of services to the US public fund market, providing solutions for more than 40 percent of the industry. Further building on its team of experts, State Street announced the appointment of Catherine Williams to the Chicago office of State Street's US public fund sales team in March of 2007. Williams also joined State Street from Northern Trust.

State Street Corporation (NYSE: STT) is the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $15.3 trillion in assets under custody and $2 trillion in assets under management at December 31, 2007, State Street operates in 26 countries and more than 100 geographic markets worldwide. For more information, visit State Street's web site at

CONTACT: State Street Corporation Carolyn Cichon, 1-617-664-8672

For ease of reference for concerned public pension plan participants (please submit comments to this blog entry for any missing plans):

* Alabama
* Alaska
* Arizona
* Arkansas
* California public employees and teachers
* Colorado
* Connecticut
* Delaware
* District of Columbia
* Florida
* Georgia
* Hawaii
* Idaho
* Illinois
* Indiana
* Iowa
* Kansas
* Kentucky
* Louisiana
* Maine
* Maryland
* Massachusetts
* Michigan
* Minnesota
* Mississippi
* Missouri
* Montana
* Nebraska
* Nevada
* New Hampshire
* New Jersey
* New Mexico
* New York
* North Carolina
* North Dakota
* Ohio
* Oklahoma
* Oregon
* Pennsylvania*** public employees and teachers
* Rhode Island
* South Carolina
* South Dakota
* Tennessee
* Texas
* Utah
* Vermont
* Virginia
* Washington
* West Virginia
* Wisconsin
* Wyoming

State Street Clients Catch Wise

State Street Corp. Is Sued Over Pension Fund Losses, By VIKAS BAJAJ, New York Times, Published: January 4, 2008

The State Street Corporation, which manages $2 trillion for pension funds and other institutions, ousted a senior executive on Thursday and said it would set aside $618 million to cover legal claims stemming from investments tied to mortgage securities.

State Street made the announcement after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds that they were told would be largely invested in risk-free debt like Treasuries. One fund lost 28 percent of its value during the credit troubles in the summer after placing big bets on mortgage-related securities, according to the lawsuits. ...

Even the hometown Massachusetts officials have figured out what State Street is really all about:

Massachusetts keeps discipline in asset allocation, Cardiff Garcia, Financial News, 18 Mar 2008

The Massachusetts Pension Reserve Investment Management Board, better known as PRIM, looks after pensions for public sector workers, including teachers.

The $52bn (€34bn) pension scheme, based in Boston, home to the US asset management industry, has terminated contracts with five asset managers since October ...

PRIM executive director Michael Travaglini said: “We adhere to a long-term policy, and if an asset class is outperforming and grows too much bigger than its target allocation, we’ll scale it back.” ...

PRIM is estimated to be the 22nd-largest US public pension scheme, and the 29th overall when including corporate schemes.

As executive director, Travaglini does not sit on PRIM’s nine-member board. He leads a staff of 24 that makes recommendations to the board on issues such as asset allocation and the hiring and firing of fund managers. ...

The scheme engages in a due diligence process that requires interviewing fund managers as well as underlying analysis. ...

Recent manager terminations were triggered by substandard performance and changes in personnel. Travaglini said each asset class was distinct and that the scheme has fired managers from one asset class while continuing to use them for another.

The scheme is looking to award an international equities contract worth $1.5bn, following PRIM’s termination of contracts with State Street Global Advisors and Boston Company Asset Management.

Additional information pertaining to clients and client lawsuits may be found at sttClients and sttLitigants, to the right.

Tuesday, March 18, 2008


The purpose of this blog branch is to provide a space where plan administrators, plan participants, and others who deal with State Street can share information about their misgivings.

Something about the way State Street deals with your organization's pension plan bothering you? Something about the way they "explain" their fee structure rubbing you the wrong way? Something about the way they "answer" your questions not sitting well with you?

Chances are, you're not alone. Not by a long shot.

But just like a carnival's shell game operator keeps each new mark separated from the prior one, so too does State Street.

So, check in here to share your State Street experiences, and to see what your fellow plan administrators, plan participants, and others who deal with State Street's shenanigans have to say. Compare notes.

And be sure to stop by sttLitigants, frequently, to see how State Street litigates against clients who catch wise, declare shenanigans, and demand a refund of their pension plan's carnival ticket money.