State Street Adds $250 Million To Legal Fund; Settles Class-Action

DOW JONES NEWSWIRES State Street Corp. (STT) added $250 million to its legal reserve to address legal exposure related to losses by investors in some strategies managed by State Street Global Advisors. The company also announced it recently entered into a proposed $89.8 million deal involving a lawsuit seeking class-action status regarding investors in active fixed income funds. The agreement is subject to court approval. The reserve increase cut the money manager's previously reported third-quarter earnings to $327 million, or 66 cents a share, from $516 million, or $1.04 a share. State Street said the reserve, which now totals $443 million, should cover the potential resolution of proceedings by the Securities and Exchange Commission and other government authorities as well as the lawsuit. Meanwhile, California lodged a suit against State Street on Oct. 20, claiming the bank secretly overcharged both the state's retirement system, Calpers, and the state's teachers' retirement system by more than $56 million in currencies trades since 2001. State Street has denied any wrongdoing and said it will defend itself against any litigation. State Street shares closed Thursday at $42.81 and were inactive premarket. The stock is up 8.9% this year. -By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;