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An internal investigation at State Street Corp. has turned up a new $200 million problem: The Boston-based financial giant says it has been overcharging big investment funds for mundane expenses like postage and printing for 18 years.

State Street shares fell 3.2 percent Thursday, to $66.40. For the company’s investors, it was the latest in a string of errors and costly regulatory run-ins since 2007, just before the financial crisis.

The company emphasized that it found the latest problem on its own, and that it will reimburse clients, with interest, after it finishes scrubbing the books. The company would not say how it detected the systemic overcharging or when it stopped.

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“We deeply regret this matter and are in the process of notifying affected clients,’’ State Street spokeswoman Anne McNally said in a statement.

Secretary of State William F. Galvin called State Street’s announcement “opaque.” The state Securities Division, which he oversees, opened an inquiry into the matter Thursday, sending a letter seeking information, including a list of the investors affected and more detail on how the problem suddenly came to State Street’s attention.

State Street’s customers are mainly institutions, such as pension funds, mutual funds, and other large investors. The part of the company involved in the overcharging was its asset servicing business, it said, which provides accounting, recordkeeping, and other services on $27.3 trillion in assets globally.

Secretary of State William Galvin called State Street’s announcement “opaque” and called for the firm to provide further information.
Secretary of State William Galvin called State Street’s announcement “opaque” and called for the firm to provide further information.Jessica Rinaldi/Globe Staff

The billing practice in question affected mainly US clients, according to State Street. The type of expenses under review are “out-of-pocket” costs, including printing, couriers, and supplies, McNally said, which represented less than 1 percent of the company’s $5.1 billion in fee revenue in 2014.

McNally also said the company has been “in contact with relevant regulators to inform them of the situation.” A spokeswoman for the Securities and Exchange Commission in Washington declined to comment on whether the agency was looking into State Street’s latest gaffe.

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Erin Davis, a banking analyst with Morningstar Inc. in Chicago, called the overcharges unfortunate. But she said that State Street is unlikely to lose customers in asset servicing, where it is one of the largest players.

But Brennan Hawken, an analyst with UBS Securities in New York, in a research note Thursday said the news could raise the potential for even more regulatory scrutiny of State Street’s internal controls. He said UBS expects State Street to “remain under the microscope by both regulators and investors for the foreseeable future.”

Barely a year has gone by since the financial crisis without State Street having troubles to disclose. There was the $11 billion in bad subprime bond bets written off in 2010, and tens of millions of dollars spent to fight allegations that it charged clients too much for foreign-exchange trades for years, in a case brought to regulators by Wall Street whistleblower Harry Markopolos that became public in 2011.

That same year, State Street found itself in the crosshairs of activist investor Nelson Peltz, who took a stake in the company for a time and pressed management to cut costs and take other actions to boost the share price.

Back then, State Street shares were trading below $34. Since then, despite some embarassing missteps, the stock has more than doubled in value, trading over $81 earlier this year. For the year, however, the stock has slumped by 15 percent, with revenue slowing in a low-interest rate environment, resulting in more cost-cutting, including a 600-person layoff announced in October.

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In June, after a routine bank examination, federal and state banking regulators ordered State Street to improve its compliance systems, to ensure that it was following anti-money laundering regulations.

Around the same time, State Street said federal securities regulators were investigating its hiring of lobbyists to win pension business in Ohio and an undisclosed state prior to 2012.

The company said at the time that it has changed its practices and no longer hires lobbyists and consultants in its sales efforts with US public retirement plans.

In the latest matter, State Street said it was continuing to review the billing over the past 18 years, for which it has “accessible records.”

The company said the annual amount it overcharged clients grew from $9 million in the early years to $36 million in 2014.


Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.