State Street Adds $250 Million To Legal Reserve

The company has also said it is cooperating with investigations mounted by the Massachusetts secretary of state and the Massachusetts attorney general.

Some customers filed lawsuits questioning whether the investments fit strategies consistent with those of more traditional fixed-income funds.

Friday, State Street said it recently entered into a settlement of the class action suit. A proposed settlement of $89.75 million is awaiting court approval, the company said.

The addition to the reserve was dated back to Sept. 30. State Street updated its third-quarter results to include the $250 million set aside, and now said its profit for the period was $327 million, or 66 cents per share. In late October, it had posted third-quarter profit of $516 million, or $1.04 per share.

State Street kept its full-year earnings forecast for adjusted earnings between $4.13 and $4.17 per share and a 16-percent operating revenue decline. Based on operating revenue of $10.48 billion for 2008, that implies a forecast of $8.8 billion revenue.

Analysts polled by Thomson Reuters, on average, expect profit of $4.11 per share, on revenue of $8.66 billion.