A warning from State Street?

State Street has announced that it will set aside $618 million to cover possible legal costs stemming from its foray into subprime securities. That will result in a $279 million loss. State Street has been sued by clients, alleging that they invested in vehicles that they were told would include less risky bonds. You have to wonder if we'll see a wave of litigation related to suitability, especially regarding money market mutual funds that exposed customers to asset-backed commercial paper. Lehman Brothers has also been sued. The last thing a money market fund investor would want is that kind of volatility. But who could have guessed it would end like this? This is another indication that the credit rating agencies--and really the entire industry--were flying blind to a large extent.   

For more:
- here's the AP article
- more suits to come? Article