State Street confirmed that it has reimbursed a United Kingdom pension fund for costs related to transitioning from one fund manager to another.
"State Street has conducted a review of a transition conducted earlier this year for a UK client," said Lucy Davidson, vice president of the company's public relations. "We have concluded that this client should be reimbursed and we have done so."
In a statement Friday, Davidson said that "certain employees" involved in the transition did not meet the standards expected from the bank. "We have zero tolerance for this behavior," she said.
Ross McLellan, global head of State Street Global Markets' portfolio solutions group, is no longer with the bank. Also reportedly gone is Edward Pennings, head of operations in Europe, the Middle East and Africa.
State Street did not disclose the amount it reimbursed the UK fund manager but a fund management consultant in the transition management industry in London said that the amount represented a difference between what the pension plan thought it would pay and what was actually charged.
SSGM is the unit of State Street which serves in the role of transition manager. The UK fund involved was a pension plan and the transition involved fixed-income assets, sources in London said. A corporate overview page for McLellan run by State Street is now classified as "temporarily unavailable."
Transition managers, such as State Street, are hired by pension plans and other plan sponsors to help them move their assets from one fund manager to another. The transition manager is paid by the pension plan or other plan sponsor to ensure that the move goes as smoothly as possible -- aka the costs are minimized for the fund manager.
The explanation of duration of the transition and an explanation of the fees are typically spelled out in a contract between the plan sponsor and the transition manager.
-- This article first appeared on Securities Technology Monitor.