BOSTON (Reuters) - A former State Street Corp (STT.N) executive avoided prison on Tuesday after cooperating with U.S. authorities investigating a scheme to defraud clients of the bank by applying secret commissions on billions of dollars in securities trades.
Richard Boomgaardt, who was the head of State Street’s transition management desk for Europe, the Middle East and Africa, faced up to five years in prison after pleading guilty in 2017 to conspiring to commit wire fraud and securities fraud.
He was instead sentenced to one year of probation by U.S. District Judge Denise Casper in Boston after a prosecutor argued he deserved credit for deciding early on to come forward and assist the U.S. Justice Department’s investigation.
“I wish I could go back and do things differently,” Boomgaardt, a citizen of Canada and the Netherlands who lives in England, said in court.
Boomgaardt, 45, is one four former employees of the Boston-based bank who have since 2016 faced U.S. charges they engaged in schemes to overcharge institutional clients, allowing State Street to earn millions of dollars.
He testified as a government witness during the trial of Ross McLellan, a former State Street executive vice president who was convicted in June of conspiracy, securities fraud and wire fraud.
The case followed a 2014 settlement between State Street and the UK Financial Conduct Authority in which the bank paid a fine of 22.9 million pounds, or $38 million at the time, for charging six customers mark-ups on certain transactions.
In 2017, State Street agreed to pay $64.6 million to resolve related U.S. criminal and civil investigations and entered a deferred prosecution agreement.
Prosecutors said that from 2010 to 2011, McLellan, Boomgaardt and another executive, Edward Pennings, conspired to add the secret commissions for trades made for the six customers, which had been utilizing the bank’s “transition management” business.
The service helps large institutional clients like pension funds move their investments between and among asset managers or liquidate large investment portfolios with the objective of minimizing the costs of transitioning the investments.
The six customers included the Kuwait Investment Authority, one of the world’s biggest sovereign wealth funds, and Irish, British and Dutch pension funds.
The scheme resulted in those clients being overcharged by more than $20 million, prosecutors said.
Pennings pleaded guilty in 2017 and also testified against McLellan. Both men are scheduled to be sentenced in October.
Reporting by Nate Raymond in Boston; Editing by Chris Reese