State Street increases legal reserve

State Street Corp., a Boston company that provides financial services to large investors, said that it added $250 million as of Sept. 30 to the reserve it established in 2007 to address legal exposure related to losses incurred by investors in certain active fixed-income strategies managed by State Street Global Advisors, or SSgA.

In a press release, State Street said it "believes the adjusted reserve should be sufficient to account for a potential resolution of proceedings by the Securities and Exchange Commission and other governmental authorities, and to address ongoing litigation with respect to this matter." Before recording the $250 million provision for legal exposure, the legal reserve totaled $193 million.

State Street also announced that it recently "entered into a settlement of the purported class action with respect to ERISA participants in the active fixed -income strategies. The proposed settlement of $89.75 million is subject to court approval."

The press release added: "State Street's outlook for the full-year 2009 remains unchanged with operating basis revenue expected to decline about 16 percent from the record level of 2008; operating earnings per share, excluding the impact of the extraordinary loss recorded upon consolidation of the commercial paper conduits in the second quarter of 2009, and the provision for legal exposure announced today, to be between $4.13 and $4.17 and operating return on equity to be between 14 and 17 percent." (Globe Staff)