‘Tis the season for state attorneys general to beat up on banks. Andrew Cuomo of New York has taken his shots in recent months, but on Tuesday it was Jerry Brown’s turn. The California AG announced he had sued State Street for ripping off two huge Golden State pension funds, CalPERS and CalSTRS. Brown is seeking around $200 million in penalties and refunds from the bank.
The case, which was originally filed under seal by whistleblowers last year in California state court, concerns markups State Street bankers allegedly extracted from the funds for executing foreign currency trade since 2001. Brown alleges that instead of charging the funds the interbank rate at which the transaction was made, State Street would charge them the highest rate of the day. State Street also tried to conceal the markups, according to Brown’s suit. In all, the attorney general claims the pension funds were overcharged more than $56.6 million over eight years. Brown is seeking treble damages, penalties and attorney fees and expenses.
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