State Street Corp. has agreed to pay more than $64 million in criminal and civil penalties to resolve US government inquiries into fraudulent secret commissions on trades for major clients of the bank in Europe, the Middle East, and Africa.
The previously disclosed conduct involved billions of dollars in trades for at least six of State Street’s overseas clients in 2010 and 2011, and more than $20 million in commissions charged without the clients’ knowledge.
To settle the matter, State Street will pay a $32.3 million criminal penalty, the Department of Justice said Wednesday. The company also agreed to pay the same amount to the Securities and Exchange Commission.
In 2014, State Street agreed to pay the UK Financial Conduct Authority $37.5 million to settle allegations in the same matter.
In a statement, State Street said it has fired the employees responsible for the trading and has “significantly strengthened our controls and procedures across our business,’’ by adding people in compliance and spending more money on those areas.
State Street also agreed to retain an independent corporate compliance monitor for three years.
The company said it “deeply regrets this matter and accepts responsibility for the actions of its former employees.’’ The company has reimbursed the six clients that were affected, the Department of Justice said.
But two former executives charged in the case plan to fight the allegations and have entered not-guilty pleas.
In April, the government charged the two former high-ranking State Street executives, Ross McLellan of Hingham and Edward Pennings, a Dutch citizen, with conspiracy, securities fraud, and wire fraud. McLellan and Pennings are scheduled for trial in October, before US District Judge Leo T. Sorokin.
McLellan, who was based in Boston, was president of State Street Global Markets, a brokerage arm of State Street. In a statement, his lawyer, Martin G. Weinberg, said McLellan “never acted for personal profit. He always acted in good faith. He always believed that any conduct he took was fully approved by State Street.’’
Pennings was a senior managing director in London who reported to McLellan. Pennings’s lawyer, Roger Burlingame, said State Street’s settlement has no bearing on his client’s case.
“Mr. Pennings has committed no crime and voluntarily came to the US to clear his name,’’ Burlingame said. “He performed his job in good faith and State Street — not Mr. Pennings — made money from the transactions, the same way banks do every day.’’
State Street said it would continue to cooperate with federal prosecutors and foreign authorities in any ongoing investigations and prosecutions.
The company has been involved in several high-profile regulatory investigations in recent years that have been costly and damaging to its reputation. On Wednesday, State Street said it has adopted “firm-wide programs on ethical decision making,’’ encouraging employees at all levels to speak up if they see actions or decisions they believe to be wrong.
“State Street engaged in an elaborate overcharge scheme which resulted in millions of ill-gotten profits and violated the trust of their clients,’’ Harold H. Shaw, special agent in charge of the FBI in Boston, said in a statement.
State Street had previously set aside $42 millionin connection with the US investigations of the trading case. It has added $23 million for the recently ended fourth quarter, to account for the settlement unveiled Wednesday.
Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.
