Asset management and servicing giant State Street Corp
The company said on Monday that Securities and Exchange Commission staff had issued a Wells notice to its banking unit on Thursday regarding disclosures and management by State Street Global Advisors of active fixed-income strategies in 2007 and in prior periods.
A Wells notice indicates that SEC staff may bring civil charges, and gives the recipient a chance to mount a defense.
The Securities and Exchange Commission said on Monday that it had no comment on the matter.
Boston-based State Street, which oversees $11.3 assets in custody and has $1.4 trillion in assets under management, said it had been cooperating with the SEC and other regulators.
In 2007, State Street established a $625 million legal reserve to cover investor claims after the company invested in mortgage-related securities that lost value when credit markets tightened in the second half of the year.
Many investors have sued State Street, accusing it of misleading them about the risks of the investments. Last month, the company said that as of March 31, it had made $418 million of payments from the legal reserve, leaving $207 million.
State Street disclosed the Wells notice in an SEC filing.
In morning trading, the company's shares were down 2 percent at $47.38.
At Friday's close, the stock was up 22.8 percent year to date, beating the 16.5 percent rise in the Dow Jones U.S. Asset Managers Index <.DJUSAG>.
(Reporting by Jonathan Stempel; Svea Herbst and Julie Vorman editing by John Wallace and Lisa Von Ahn)