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It is no secret that this magazine has been aggressive in exposing problems within State Street’s transition management team. Since breaking the news in October 2011 that the custody bank had overcharged multiple European pension funds for asset transitions, we have stayed close to the story via magazine articles, conference panels, and ongoing news coverage.
There has been a chorus of both praise and condemnation for the pugnaciousness of this coverage. On one hand, I have personally been accused of milking the issue for advertising revenue (false), because of a personal vendetta (false), and due to a deep-seated compulsion to feed my inflated vanity (no comment). On the other hand, many a pension CIO has told me that this was an issue likely to be swept under the rug if we had not been so aggressive in our reporting. (I also like to think that our work’s recent nomination for “Best News Coverage” at the Jesse H. Neal Awards—the “Pulitzer’s of business-to-business journalism,” according to people who may or may not know exactly what a Pulitzer is—vindicates the newsworthiness of what we’ve produced.)
Yet through all the action, accusations, official responses from State Street, anonymous tips from three continents, British employment hearings, and more, one man has remained silent: Ross McLellan.
McLellan, as many know, was the person tasked with overseeing Edward Pennings, the man in London who was allegedly at the center of the overcharging scandal. Both were dismissed following the allegations that clients were misled regarding how State Street was making money, and Pennings has since voiced his side of the story in an East London employment tribunal. McLellan, on the other hand, has sat silently in Boston, prohibited by contract and discretion from speaking to the press.
Until now.
McLellan, as it turns out, has a lot to say. Not about what happened at State Street in 2011—because of the common legal agreements following such dismissals, we will likely never hear his insider account of what happened—but about the industry in which he’s been embedded for the better part of two decades. Some of what he says will surprise you. Some of it will not surprise you in the slightest. Regardless, I think it adds a valuable layer to this already intriguing story.
I am sure that by printing McLellan’s views in these pages I will once again be accused of pursuing a nefarious agenda at the expense of journalistic integrity. I forcefully disagree—and the persistence of noteworthy news reinforces my belief. According to multiple sources, the Financial Services Authority (FSA) is currently investigating the bank over this issue. According to at least one of the affected funds, the final FSA report (not expected out for quite some time) will influence how much business the bank receives in the future. And according to multiple industry insiders, the transition management issue has led to some of the bank’s largest clients casting a skeptical glance at transitions present and past.
So accuse away. Just don’t say we’re not letting all sides of the story speak.