Ex-State Street executive waives extradition to face U.S. charges

(Adds comment from defense lawyer)

By Nate Raymond

Aug 16 (Reuters) - A former State Street Corp executive has waived his right to UK extradition proceedings and has pleaded not guilty to U.S (Other OTC: UBGXF - news) . charges that he engaged in a scheme to defraud six clients through secret commissions on billions of dollars of trades.

Edward Pennings, a former State Street senior managing director who worked in the bank's London office, entered the plea in federal court in Boston on Monday to charges including securities fraud and wire fraud, prosecutors said.

Pennings, a Dutch citizen who resides in the United Kingdom, was released on a $2 million bond, according to a spokeswoman for the U.S. Attorney's Office in Boston.

Roger Burlingame, a lawyer for Pennings, said on Tuesday that his client voluntarily came to the United States to contest the charges and to clear his name.

"He did not commit a crime and had absolutely no intent to do so," Burlingame said in an email.

The arraignment followed Pennings' indictment in April with Ross McLellan, an ex-State Street executive vice president, and the bank's July 26 announcement that it would pay $530 million to resolve related U.S. regulatory matters and litigation.

State Street in 2014 reached a related settlement with the UK Financial Conduct Authority. It (Other OTC: ITGL - news) paid a fine of £22.9 million, or $38 million at the time, for charging "substantial mark-ups" to the six clients, including Irish and British government pension funds, on certain transactions.

Prosecutors said that from 2010 to 2011, McLellan, Pennings and others conspired to add secret commissions to fixed income and equity trades performed for the six clients.

Prosecutors said the clients were using a State Street unit that helps institutional customers move their investments between asset managers or liquidate large investment portfolios.

The commissions, which McLellan and Pennings took steps to hide, came on top of fees the clients agreed to pay despite written instructions to the bank's traders that they should not have to do so, prosecutors said.

McLellan, a Massachusetts resident, pleaded not guilty in April. Both men are scheduled to face trial in October 2017.

The case is U.S. v. McLellan et al, U.S. District Court, District of Massachusetts, No. 16-cr-10094. (Reporting by Nate Raymond in New York; Editing by Dan Grebler)