The SEC recently announced that State Street will pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities. According to an SEC order, State Street engaged in a scheme to overcharge transition management customers and generated approximately $20 million in improper revenue. Transition management is a service provided by some financial institutions to institutional customers that are undergoing a “transition,” such as changing investment advisers or investment strategies. State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets, according to the SEC’s order. In a separate order, the SEC found that State Street failed to inform subscribers to its government securities trading platform that despite marketing the system as “fair and transparent” it provided one subscriber with a trading functionality that allowed a short period of time for the subscriber to reject a match to a submitted quote. State Street did not inform other subscribers that they had been connected to an account that could – and did -- reject matched quotes. State Street provided the trading functionality to the subscriber to mitigate its risk as a market maker with the hope that it would provide more liquidity on the platform. State Street did not admit or deny the SEC’s findings.