State Street revealed Thursday it had incorrectly charged clients by at least $200 million over an 18-year period.
The incorrect charges were billed to asset servicing clients primarily in the US, according to the firm’s expense review.
In a statement, State Street said it would fully compensate affected clients at the conclusion of the billing review, including interest, as well as make any necessary changes to its billing practices.
“We deeply regret this matter and are in the process of notifying affected clients,” a spokesperson said. “This is an issue that we identified and one that we are committed to resolving.”
The expense categories under review represent a total of $400 million, with annual amounts invoiced ranging from $9 million in the early years to $36 million in 2014. Total asset fee revenue in fiscal year 2014 was $5.1 billion.
The actual amount that clients will be reimbursed will not be known until the review is completed, and could differ “materially” from the $200 million cited in this preliminary assessment, the firm said.
State Street’s asset servicing business is already under scrutiny by the US Securities and Exchange Commission (SEC) for methods it used to solicit public pension mandates during a period ending in 2011. An SEC filing in June said the investigation focused on State Street’s use of consultants and lobbyists, as well as at least one instance of political contributions by a consultant during and after a public bidding process.
A State Street spokesperson said in June that the firm has since eliminated the hiring of consultants and lobbyists for its asset servicing dealings.
“Since 2011, we have also enhanced our compliance training and oversight for employees,” she said.
Related: State Street Under Investigation for Public Pension Pitch Tactics & State Street’s Pension Pitch Questioned