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Newsmakers

State Street Shuffles London Team Following Scandal

Peter O’Neil and Karen Keenan have stepped into leading roles in the London office of State Street; Stephen Smit, long-associated with the firm’s transition business, has seen his role altered.

(August 14, 2012)-Stephen Smit, State Street’s head of Global Markets Europe and Investor Services UKMEA, has seen his role diminished significantly–a direct result, multiple sources say, of the firm’s transition management troubles.

Moving back into the lead role in London for the firm will be Peter O’Neil, who has been based in the Asian market in recent years. Karen Keenan, an executive vice president supporting strategic initiatives, will take the lead role for State Street Global Markets (SSGM).

Smit was responsible for investor services, securities finance, foreign exchange, equities, and fixed-income trading activities in the European market for the firm. There is no suggestion that Smit was party to any improper activities carried out by the transitions team. 

As such, he oversaw Edward Pennings–the State Street employee who was dismissed in October 2011 following revelations, first reported by aiCIO, that he had misled clients regarding the pricing of fixed-income transitions. These clients included the Royal Mail and Sainsbury’s pension systems. State Street claims that all clients affected by Pennings’ actions have been reimbursed.

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Smit will continue to oversee State Street Global Services’ business in EMEA. 

When asked for comment, State Street said: “Consistent with our global growth objectives and to ensure we can capture all of the opportunities that broad market and regulatory change are driving we continue to deepen our management bench globally. Karen Keenan’s appointment to lead our Global Markets business in EMEA reflects these objectives and builds on other recent appointments.”

There have been other casualties as a result of the scandal. Boston-based Ross McLellan left the firm in October as a result of the revelations; Rick Boomgaardt, head of EMEA transition management, left the in firm earlier this year. In January 2012, former-JP Morgan transition management guru John Minderides was hired to lead State Street’s transition efforts in the United Kingdom.

Home > News > Asset Allocation > Risk Is Back – As Long as Central Banks Come Good on Promises
Asset Allocation

Risk Is Back – As Long as Central Banks Come Good on Promises

Investors are ready to get back on the horse as they have heard good things from central banks – all they need now is action, not just rhetoric.

(August 14, 2012) — Investor confidence has taken its biggest monthly leap in three years as regulators and politicians have made the right noises, but this could all change if central banks do not fulfil their promises.

Allocations to equities, real estate and commodities have jumped this month since investors flocked to cash in July, according to a monthly survey by Bank of America Merrill Lynch.

A net 15% of investors responding to the survey said they believed the world economy would improve over the next 12 months. This represented a 28 percentage point swing and marked the most acute turnaround in confidence since May 2009, when the world emerged from the credit crunch, the bank said.

“August’s surge in confidence seems to be more a triumph of policy projection and potential than positive economic data,” said Gary Baker, head of European equities strategy at BofA Merrill Lynch Global Research. “As indicated by the survey, the risk is now that inaction by policy makers would lead to a negative reaction in global markets.”

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Respondents indicated they expected the European Central Bank would step in to help ease pressures in the Eurozone. This followed the bank’s president, Mario Draghi, announcing last month that the institution would do “whatever it takes” to bring financial stability back to the region. Critics have wondered when the bank is likely to take such action, however.

This confidence of resurgence in Europe was shown by investors either allocating more or expressing a desire to European stocks. Instead, the United States is proving a concern for investors, with more of them citing the nation’s fiscal cliff as the largest tail risk rather than the European debt crisis.

Bullish sentiment over real estate this month has seen the largest allocation to the asset class since January 2007, BoA Merrill Lynch said. Commodities saw positive sentiment with the percentage of investors underweight the asset class dropping from a net 13% to 2%.

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