June 8, 2017 / 4:44 PM / 2 months ago

Second ex-State Street exec to plead guilty in U.S. fraud probe

3 Min Read

BOSTON, June 8 (Reuters) - A second former State Street Corp executive is expected to plead guilty in connection with what U.S. prosecutors say was a scheme to defraud six clients through secret illicit commissions on billions of dollars of trades.

Richard Boomgaardt, who lives in Britain and was head of State Street's transition management desk for Europe, the Middle East and Africa, is expected to plead guilty to conspiring to commit wire fraud and securities fraud on July 12.

The plea, disclosed in a court calendar notice on Thursday, would make him the second former State Street executive to plead guilty in the case, which is pending in federal court in Boston.

Edward Pennings, a former senior managing director in State Street's London office, agreed to plead guilty to one count of conspiring to commit wire fraud and securities fraud, according to court records filed on Tuesday.

Pennings, who also lives in Britain, is scheduled to enter his plea on June 28.

Lawyers for Boomgaardt and Pennings did not respond to requests for comment.

The former State Street executives are among three who have been charged by U.S. prosecutors since April 2016 in connection with the probe. The bank agreed in January to pay $64.6 million to resolve related U.S. criminal and civil investigations.

The case followed a 2014 settlement between State Street and the UK Financial Conduct Authority in which the Boston-based bank paid a fine of £22.9 million, or $38 million at the time, for charging the six clients mark-ups on certain transactions.

From 2010 to 2011 Pennings, Boomgaardt and Ross McLellan, a former executive vice president, conspired to add the secret commissions to fixed income and equity trades performed for certain clients, prosecutors said.

The clients were using a State Street unit that helps institutional customers move investments between asset managers or liquidate large investment portfolios, prosecutors said.

McLellan has pleaded not guilty to securities fraud and wire fraud charges. His trial is scheduled for October.

The cases in U.S. District Court, District of Massachusetts, are U.S. v. McLellan, et al, No. 16-cr-10094, and U.S. v. Boomgaardt, No. 17-cr-10167. (Editing by Jeffrey Benkoe)

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