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State Street to Pay $12 Million to Settle Pay-to-Play Scheme in Ohio

State Street Corp. will pay $12 million to settle allegations that it conducted a pay-to-play scheme to win Ohio pension fund contracts, U.S. regulators said Thursday.

The Securities and Exchange Commission also charged the company's public funds group head and the company's lobbyist in connection with the alleged scheme.

Vincent DeBaggis, who headed the public funds group, settled the charges and agreed to pay more than $274,000. The SEC said Robert Crowe, the company's outside lobbyist, is contesting the charges in federal court.

The SEC said DeBaggis struck a deal with Ohio's former deputy treasurer to make "illicit cash payments and political contributions." In exchange for the quid pro quo, the SEC said that State Street won awards for three contracts.

The regulator added that Crowe actively participated in the pay-to-play scheme.

A spokeswoman for State Street on Thursday acknowledged that the activity described in the SEC settlement "violated State Street's standard of conduct" and said its management was not aware of the scheme at the time.

The bank added that it fired the employee, and in 2012, it also eliminated its practice of hiring consultants to help solicit asset servicing agreements for state retirement plans.

Attorneys for DeBaggis and Crowe could not be immediately reached for comment.

 

 

 

(Reporting by Sarah N. Lynch and Lisa Lambert; Editing by Cynthia Osterman)

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