Mass. Fines State Street $5M Over CDO Omissions

Law360, New York (February 28, 2012, 4:16 PM EST) -- A Massachusetts securities regulator on Tuesday fined a State Street Bank & Trust Co. division $5 million for allegedly failing to disclose crucial information about a hedge fund's involvement in a $1.56 billion collateralized debt obligation that eventually defaulted.

Investors lost $450 million after Carina CDO Ltd. was forced into liquidation, but Illinois-based Magnetar Capital LLC reaped a windfall based on its decision to short a substantial portion of the collateral in the structured finance product, according to a consent order from the securities division of...
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