More Details Emerge About SEC, DOJ Probe Into State Street Pension Business

SEC Building

State Street won a $32 billion contract from Ohio’s retirement systems after the firm hired a lobbyist who had a cushy relationship with Ohio’s then-deputy treasurer. The deputy treasurer, in turn, had oversight of the contract.

That allegation is one among several levied against State Street by the Department of Justice and the SEC, who are probing the way State Street solicited public pension business.

From the Wall Street Journal:

Federal officials are examining the connections between Boston financial giant State Street Corp. and an Ohio lobbyist as part of a broader look at the company’s dealings with public pension funds, according to people familiar with the investigations.

The scrutiny from the Justice Department and the Securities and Exchange Commission centers on State Street’s hiring of the lobbyist in 2010, several months before winning a contract to provide administrative services for $32 billion in three of Ohio’s largest retirement systems.

[…]

In Ohio, the investigation in part concerns the relationship between lobbyist Mohammed Noure Alo and Ohio’s then-deputy treasurer, Amer Ahmad. The men were in touch roughly 14 times a day over a certain period via text and phone, according to court testimony from an agent with the Federal Bureau of Investigation. The treasurer’s office had oversight of the contract.

State Street’s interactions with Mr. Alo, the founding member of a Columbus law firm, began in early 2010, when Mr. Alo met a State Street representative at a campaign event for the state treasurer, according to the FBI agent’s testimony last week during a U.S. court hearing. State Street contacted him with a draft contract for work as a lobbyist and Mr. Alo forwarded that document to Mr. Ahmad, the FBI agent said.

Mr. Alo, who became a registered Ohio lobbyist in 2010, also approached Bank of New York Mellon Corp. with the same request, leaving a voice mail claiming the bank’s existing business with the state was “not really guaranteed to stay with you,” according to the testimony. Both banks were vying for a contract to handle assets held by three Ohio pension funds. Bank of New York Mellon didn’t retain Mr. Alo, while State Street eventually agreed in the contract to pay him $16,000 upfront, according to the FBI testimony. BNY Mellon declined to comment.

Federal officials uncovered what they described as a separate $3.2 million kickback scheme involving an Ohio securities broker and the Ohio treasurer’s office while investigating the State Street deal. They brought charges in that case against Messrs. Alo and Ahmad and two other men. All four have pleaded guilty.

The lobbyist, Mohammed Noure Alo, hasn’t been accused of breaking the law in this instance by the SEC of DOJ. But he does have a recent criminal history. From the WSJ:

Mr. Alo, who hasn’t been accused of any wrongdoing surrounding the State Street contract, pleaded guilty in December 2013 to wire fraud as part of a separate bribery and money-laundering case. A U.S. judge sentenced him to four years in prison on Wednesday for his role in the scheme, during which he accepted $123,000 from a securities broker picked by the treasurer’s office to handle certain trades for the state. Mr. Alo’s lawyer declined to comment.

Pension360 reported on Monday that State Street had admitted in a regulatory filing to being probed by the SEC and the DOJ.

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