Head of State Street Unit Steps Down

BOSTON -- State Street Corp. set aside $618 million to cover costs associated with its investment arm and replaced the head of the unit, the world's largest money manager for institutions said Thursday, The Associated Press reported.

The Boston company will take an after-tax charge of $279 million, or 71 cents a share, to set up the reserve, but State Street also said that excluding the charge, revenue and profits would likely top expectations it released two months ago, the AP reported. State Street said it expects to report fiscal 2007 earnings per share between $3.42 and $3.45 on revenue growth of more than 30 percent.

William Hunt, who headed the State Street Global Advisors investment wing, resigned and was replaced on an interim basis by James Phalen, the AP reported.

State Street said some investments have been hurt by exposure to subprime mortgages and a lack of liquidity in those markets. The company said it faces possible legal action from customers who say the investment arm, under Hunt, did not manage fixed-income investments in line with customer intent, the AP reported.

-- NYSSCPA.org News Staff

Posted on 1/3/08