State Street, one of the world's largest asset managers, said Thursday it will take a $279 million charge for legal and other costs after making bad bets on subprime mortgages and other debt, and said the head of its investment management arm has resigned.
The Boston-based company said the fourth-quarter charge equals 71 cents per share, and addresses costs related to fixed-income underperformance at its State Street Global Advisors unit, in part from exposure to and illiquidity in subprime mortgages.
The charge also addresses "customer concerns as to whether the execution of these strategies was consistent with the customers' investment intent."
William Hunt, who had led State Street Global Advisors, resigned, State Street said.
James Phalen, 57, now head of international operations for investment servicing and investment research and trading, was named the unit's interim president and chief executive. He reports to Ronald Logue, State Street's chief executive.