State Street Subprime Damages May Increase

NEW YORK -- State Street Corp., the largest money manager for institutions, may have to pay more than 12 times the $625 million it set aside for damages from lawsuits over losses from subprime-mortgage investments made for pension funds, Bloomberg News reported.

Prudential Financial Inc., the second-largest U.S. life insurer, is suing the Boston-based company on behalf of more than 200 retirement plans, alleging that State Street inappropriately invested their money in risky securities. Three other companies filed similar actions, Bloomberg News reported.

Neither side has disclosed potential losses, though State Street has reported that the value of assets “adversely affected'' by the collapse in subprime mortgages fell 56 percent to $6.1 billion at the end of 2007 from $13.9 billion on June 30, Bloomberg News reported.

-- NYSSCPA.org News Staff

Posted on 5/8/08