A question of trust at State Street Trust and Banking
TOKYO – State Street Trust and Banking has been ordered by Japan's Financial Services Agency to suspend operations for engaging in new trust business associated with the management of trust assets for a month, starting on February 6. The FSA cracked down on State Street after an inspection in June 2005 revealed that the firm had established a Japan branch of a company registered in the US state of Delaware "out of the FSA's scope of authority for supervision and inspection"; appointed a representative who was given the title of 'Representative in Japan and Chief Executive Officer' to be used externally; and essentially put that executive in charge of substantial portions of the firm's Japan operations – undermining the Japan-based board of directors.
The firm is also said by the FSA not to have had proper compliance and governance systems – which it must now institute.
The regulator also accuses the bank of not returning customer funds "as a result of many years of lax administration and operations", and other violations. The full administrative action can be found at www.fsa.go.jp/news/newse/e20060127-5.html.
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