Tuesday, October 14, 2008

sttPressCenter Joins the Family!

Look to the menu at the right.

Thursday, October 9, 2008

sttChat joins the family!

Serious investors - tired of the yahoos on Yahoo! (and wise to the fact that STT's senior management pollute the discussion of facts there) - are invited to apply to join sttChat.

This new forum is meant to supplement Yahoo! (which is a fantastic tool), and we hope to see many sttChatters on Yahoo! as well.

Tuesday, April 8, 2008

State Street's Board of Directors Ignores Key Risk Factor in Their Own Midst

Rearranging deck chairs on the S.S. Clipper Ship, the Board of Directors today appointed one of their own as Chief Risk Officer.

State Street's clients and counterparties are probably watching these developments with some interest - and wondering: why did the Board of Directors ignore the biggest risk factor of all, right in their own ranks?

Will any of the analysts finally write the note?

Wednesday, April 2, 2008

Tuesday, April 1, 2008

Note the New Poll Feature

Since we're in the lull leading up to Pennsylvania - where State Street's PolPals will be a factor in the race - we thought a straw poll feature would help scratch an itch for the politically-inclined. Scroll down the page, on the right.

Friday, March 21, 2008

State Street Summit

On Monday, April 28, 2008, a State Street Summit will be held. If you are interested in attending, and if you are a State Street:

* Client
* Counterparty
* Reporter
* Analyst
* Other Interested Party

Please contact me by clicking on the Face of Aeolus to the right. Details regarding the speaker line-up, agenda, place, and time will be forthcoming soon.

Thursday, March 20, 2008

Contact Info

"Dear Aeolus,

How do I contact you with information?"

See the contact information in my profile (click on the Face of Aeolus to the right), or - if you prefer - post an anonymous comment for me to view, like that question.

sttWhistleblowers Adds sttAnalysts and sttDirectors

To provide a more comprehensive view of why the Clipper Ship's sails are slack, sttWhistleblowers has added these two new branches to the blog cluster.

Wednesday, March 19, 2008

State Street's Clients Catch Wise

State Street Corp. Is Sued Over Pension Fund Losses, By VIKAS BAJAJ, New York Times, Published: January 4, 2008

The State Street Corporation, which manages $2 trillion for pension funds and other institutions, ousted a senior executive on Thursday and said it would set aside $618 million to cover legal claims stemming from investments tied to mortgage securities.

State Street made the announcement after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds that they were told would be largely invested in risk-free debt like Treasuries. One fund lost 28 percent of its value during the credit troubles in the summer after placing big bets on mortgage-related securities, according to the lawsuits. ...

Even the hometown Massachusetts officials have figured out what State Street is really all about:

Massachusetts keeps discipline in asset allocation, Cardiff Garcia, Financial News, 18 Mar 2008

The Massachusetts Pension Reserve Investment Management Board, better known as PRIM, looks after pensions for public sector workers, including teachers.

The $52bn (€34bn) pension scheme, based in Boston, home to the US asset management industry, has terminated contracts with five asset managers since October ...

PRIM executive director Michael Travaglini said: “We adhere to a long-term policy, and if an asset class is outperforming and grows too much bigger than its target allocation, we’ll scale it back.” ...

PRIM is estimated to be the 22nd-largest US public pension scheme, and the 29th overall when including corporate schemes.

As executive director, Travaglini does not sit on PRIM’s nine-member board. He leads a staff of 24 that makes recommendations to the board on issues such as asset allocation and the hiring and firing of fund managers. ...

The scheme engages in a due diligence process that requires interviewing fund managers as well as underlying analysis. ...

Recent manager terminations were triggered by substandard performance and changes in personnel. Travaglini said each asset class was distinct and that the scheme has fired managers from one asset class while continuing to use them for another.

The scheme is looking to award an international equities contract worth $1.5bn, following PRIM’s termination of contracts with State Street Global Advisors and Boston Company Asset Management.

Additional information pertaining to clients and client lawsuits may be found at sttClients and sttLitigants, to the right.

Tuesday, March 18, 2008

sttWhistleblowers Welcomes sttClients, sttLitigants, sttPolPals, and sttShareholders

Depending on your relationship(s) with State Street, you may find these other blog branches (links in the sttBlogCluster section, to the right) to be of interest. Thanks for visiting.

Monday, March 17, 2008

Happy Saint Patrick's Day! State Street Files Proxy Materials

Happy Saint Patrick's Day!

State Street filed its definitive proxy statement and form of proxy today.

More than a few noteworthy changes appear in this year's proxy materials; more on those changes in future blog entries.

For now, three items stand out:

* The Annual Meeting date has been moved: typically held the third Wednesday in April, this year it is being held on April 30th. What prompted the change?

* Patrick Jorstad, the shareholder who has repeatedly met with success on his prior proposals to bring about corporate governance reforms, has filed another one: this time, seeking to force fuller disclosure of non-audit fees paid to Ernst & Young in the past, while seeking to prohibit such fees in the future.

* Another proposal has been filed, seeking to require shareholder say on pay for key executives at State Street. Outlined under Other Matters, it is described as follows:

The Board of Directors does not know of any other matters that may be presented for action at the annual meeting, except that management has been informed that a shareholder intends to submit a proposal that would amend our by-laws to require that the annual compensation package of the Chairman of the Board, Chief Executive Officer, President, Treasurer, Secretary and any Vice Chairman of State Street be submitted to our shareholders for approval at each annual meeting and to prevent any enlargement of any such compensation without the affirmative approval vote of three-fifths of the shares outstanding. If this “floor” proposal is properly brought before the meeting, the persons named on the enclosed proxy intend to use their discretionary authority to vote against it.

Given the bloated pay packages being doled out to some of these executives, this last proposal may be a sleeper success in the making. (And with two extra weeks given to any solicitation-minded dissidents, there is even extra time to persuade voting shareholders.)

Happy Saint Patrick's Day, indeed!

State Street and Counterparty Risk

State Street filed its Annual Report (Form 10-K) on February 15th.

With this weekend's news of Bear Stearns' implosion, State Street shareholders might want to give a careful re-read to the Annual Report, paying particular attention to the Directors' disclosures regarding counterparty risk.

Our focus on large institutional investors and their businesses requires that we assume credit and counterparty risk, both on- and off-balance sheet, in a variety of forms. We may experience significant intra- and inter-day credit exposure through settlement-related extensions of credit. From time to time, we may assume concentrated credit risk at the individual obligor, counterparty, guarantor, industry and/or country level, thereby potentially exposing us to a single market or political event or a correlated set of events. The credit quality of our on- and off-balance sheet exposures may be affected by many factors, such as economic and business conditions or deterioration in the financial condition of an individual counterparty, group of counterparties or asset classes. If a significant economic downturn occurs in either a country or a region, or we experience the failure of a significant individual counterparty, we could incur financial losses that could adversely affect our earnings. ...

Credit risk: the risk of loss that may result from the default or downgrade of a borrower or counterparty ...

While we believe that our risk management program is effective in managing the risks in our businesses, external factors may create risks that cannot always be identified or anticipated. For example, a material counterparty failure or a default of a material obligor could have a material adverse effect on our consolidated results of operations. ...

Credit and counterparty risk is defined as the risk of financial loss if a borrower or counterparty is either unable or unwilling to repay borrowings or settle in accordance with contractual terms. The extension of credit and acceptance of counterparty risk by State Street are governed by corporate guidelines based on the prospective customer's risk profile, the markets served, counterparty and country concentrations, and regulatory compliance. Our focus on large institutional investors and their businesses requires that we assume concentrated credit risk in a variety of forms to certain highly-rated entities. This concentration risk is mitigated by comprehensive guidelines and procedures to monitor and manage all aspects of credit and counterparty risk that we undertake. Exposures are evaluated on an individual basis at least annually.

We provide, on a limited basis, traditional loan products and services to key customers and prospects in a manner that enhances customer relationships, increases profitability and minimizes risk. We employ a relationship model in which credit decisions are based upon credit quality and the overall institutional relationship. This model is typical of financial institutions that provide credit to institutional customers in the markets that we serve. ...

Processes for credit approval and monitoring are in place for other credit extensions. As part of the approval and renewal process, appropriate due diligence is conducted based on the size and term of the exposure, as well as the quality of the counterparty. Exposures to these entities are aggregated and evaluated by ERM.

What say you, State Street Whistleblowers?

Do the Directors (and the key executives that the Directors hired and supervise) have the right controls in place to properly assess, manage, and mitigate counterparty risk?

Saturday, March 15, 2008