Docket No. 413

In the Matter of State Street Bank and Trust Company

April 30, 1992

Disposition Agreement



This Disposition Agreement (Agreement) is entered into between
the State Ethics Commission (Commission) and the State Street Bank
& Trust Company (State Street) pursuant to s. 5 of the Commission's
Enforcement Procedures. This Agreement constitutes a consented to
final Commission order enforceable in the Superior Court pursuant
to G.L. c. 268A, s. 4(j).

On March 8, 1989, the Commission initiated a preliminary
inquiry, pursuant to G.L. c. 268A, s. 4(a), into possible
violations of the conflict of interest law, G.L. c. 268A, by State
Street. The Commission concluded that inquiry and, on November 9,
1989, found reasonable cause to believe that State Street violated
G.L. c. 268A, s. 3(a).

The Commission and State Street now agree to the following
facts and conclusions of law:

1. State Street is a Massachusetts trust company chartered
under the laws of Massachusetts to engage in the business of
banking. Its principal place of business is Boston, Massachusetts.

2. The City of Boston Retirement Board is a State Street
client. The Boston Retirement Board invests the approximately $800
million in funds contributed by city workers towards their
pensions. State Street's Trust Department serves as the custodian
of those funds. In fiscal years 1987 and 1988, State Street
received from the City of Boston $198,817.00 and $367,194.00,
respectively, in custodian fees.

3. From March 1, 1987 to March 4, 1987, State Street hosted
its ninth annual Master Trust Client Conference at the Arizona
Biltmore Resort in Phoenix, Arizona. From February 28, 1988 to
March 2, 1988, State Street hosted its tenth annual Master Trust
Client Conference at the Westin La Paloma Resort in Tucson,
Arizona. State Street invited its Trust Department's private and
public sector clients to the conferences.

4. The Master Trust Client Conferences included morning
investment seminars and lectures between approximately 8:00 a.m.
and noontime, afternoon recreational events, and evening dinners
and entertainment.

5. State Street wed the conferences as educational events for
its clients, and as a means to generate and maintain good will and
client relations.

6. In 1987 and 1988, State Street Vice-President John Houlihan
invited City of Boston Auditor Leon Stamps to the Master Trust
Client Conferences. As Auditor, Stamps was one of the three members
of the Boston Retirement Board.

7. Stamps attended the conferences. State Street paid for
Stamps' on-site hotel, recreation and entertainment expenses,
including extra nights immediately before or after the formal
conferences, aggregating five nights for the 1987 and 1988
conferences. Stamps' on-site expenses totaled $ 1,716.67. State
Street did not pay for Stamps' airfare.

8. Section 3(a) of G.L. c. 268A prohibits, other than as
provided by law, the giving or offering of anything of substantial
value to any municipal employee for or because of any official act
performed or to be performed by such employee.[1] The Commission
may impose a fine up to $2,000 for each violation of s. 3.

9. By paying for Stamps' lodging, recreation and entertainment
expenses when Stamps was in a position as a member of the Boston
Retirement Board to vote to

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award custodian business to the bank, State Street violated s.
3(a).[2]

10. In this case, there is no evidence that State Street had
a corrupt intent,[3] nor that it intentially violated G.L. c. 268A,
s. 3. Additionally, there is no evidence that the conduct of
Auditor Stamps was improperly influenced by the conferences.

11. In view of the foregoing and because of the educational
aspects of the events at issue, the Commission has determined that
the public interest would be served by resolving the matter without
further enforcement proceedings and with the imposition of less
than the maximum fine. Thus, this matter will be resolved on the
following terms and conditions agreed to by State Street:

1. that it pay to the Commission the amount of two thousand
dollars ($2,000.00) as a civil penalty for its violations of s. 3;
and

2. that it waive all rights to contest the findings of fact,
conclusions of law, and terms and conditions contained in this
Agreement in this or any related administrative or judicial civil
proceeding to which the Commission is a party.

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[1] In the past, the Commission has considered entertainment
expenses totalling $50 or more to constitute "substantial value."
Public Enforcement Letter 88-1.

[2] State Street has since restructured its conference
arrangements to conform to the conflict of interest law as applied
and interpreted by the Commission.

[3] For s. 3 purposes, it is unnecessary to prove that the
gratuities given were generated by some specific identifiable act
performed or to be performed. The prohibitions of this section are
prophylactic in nature and apply where the parties act without
corrupt intent and even though no official act is improperly
influenced by the benefit conferred. It is sufficient that the
gratuities are given the official "in the course of his everyday
duties for or because of official acts performed or to be performed
by him and where he was in a position to use his authority in a
manner which could affect the gift giver." United States v.
Standefer, 452 F. Supp. 1178, 1183, (W.D. Pa. 1978) (aff'd on other
grounds, 447 U.S. 10 (1980)), citing United States v. Niederberger,
580 F.2d 63, 68-9 (3rd Cir. 1978). See also United States v. Evans,
72 F.2d 455, 479-80 (5th Cir. 1978).

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