Custodian’s cyber fallout with pension fund is a wake-up call

This week, State Street is going to be scrutinized for data security incidents that affected a pension fund client, LACERA (Los Angeles County Employees Retirement Association, $56bn AuM). Detailed summaries of the incidents can be found here and here.

The breach identified as most serious resulted in a fixed income investment manager not affiliated with LACERA gaining unauthorized access to the pension fund’s data through State Street’s client portal, with a view of the position and trade activity of one of LACERA’s fixed income managers.

Suffice it to say, that LACERA’s CIO, Jonathan Grabel, sent some strongly worded emails to State Street’s then-CEO Joseph Hooley, with comments like “unacceptable” and “extremely slow in reporting these matters” and “raises questions about our systemic dependence on State Street”.

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