State Street Corp. will pay $530 million to settle years of regulatory investigations and private lawsuits alleging that it overcharged pensions, mutual funds, and other clients on foreign currency trades.
Under an agreement with federal authorities announced Tuesday, the Boston-based financial services giant will pay $167.4 million to the Securities and Exchange Commission and $155 million to the Department of Justice, as well as $50 million to pension clients.
The payouts are aimed at concluding investigations that State Street has faced since 2009, when Wall Street whistle-blower Harry Markopolos filed a lawsuit on behalf of the nation’s largest public pension funds, in California. He later filed additional lawsuits in Massachusetts and around the country.
“Mutual funds and other registered investment companies should not face overreaching by the very banks hired to safeguard their assets,’’ Paul G. Levenson, director of the SEC’s Boston regional office, said in a statement.
State Street said it was settling the cases because “matters of this nature can drain both time and resources.”
The agreements still need approval from a federal court.
The company said it had previously set aside reserves to cover the costs of litigation and settlement payouts. It also reserved funds to pay an additional $147.6 million to resolve private class-action lawsuits filed by customers over the same issues, the company said.
State Street is scheduled to release its quarterly earnings Wednesday morning.
The alleged misconduct took place from 1998 to 2009. A large custody bank with major investment clients around the world, State Street admitted to the US attorney that, despite promising to get customers the best possible currency trades, it had hidden mark-ups, which boosted its profits.
“State Street’s custody clients, many of whom were public pension funds, financial institutions, and non-profit organizations, had a right to expect that State Street would execute transactions in an honest and forthright manner,” US Attorney Carmen M. Ortiz said in a statement. Instead, she said, the company reaped “substantial profits” at the expense of its custody clients.
Bank of New York Mellon Corp. last year agreed to pay $714 million to settle the government’s foreign exchange probes, as well as private lawsuits.
Markopolos will earn whistle-blower’s fees in the case. This was his first major case after he tried repeatedly to alert authorites to the Bernard Madoff swindle.