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SEC charges 2 ex-State Street workers over subprime
By Svea Herbst-Bayliss and Jonathan Stempel
BOSTON/NEW YORK | Thu Sep 30, 2010 2:07pm EDT

BOSTON/NEW YORK (Reuters) - Two former top State Street Corp. executives were hit with securities fraud charges on Thursday for misleading investors about a risky subprime mortgage-laden fund and tipping off favored clients.

The U.S. Securities and Exchange Commission said it charged John Flannery, a former member of State Street's executive management group, and James Hopkins, the former head of product engineering for North America.

The civil charges come nearly eight months after State Street, one of the world's biggest institutional investors with $1.9 trillion under management, agreed to pay more than $300 million to settle related charges by state and federal regulators.

In addition to the $300 million, State Street agreed to pay roughly $350 million to settle private lawsuits over its investments.