Two charged with marketing sub-prime fund as 'enhanced cash'

The SEC has charged two employees of Boston-based State Street with misleading investors over exposure to sub-prime debt.

According to the US regulator, John Flannery and James Hopkins marketed State Street's Limited Duration Bond fund as an "enhanced cash" strategy, even though the vehicle mostly investing in residential mortgage-backed securities.   "Hopkins and Flannery misled State Street's investors about the risks and credit quality of a fund concentrated in sub-prime bonds and other sub-prime investments," Robert Khuzami, director of the SEC's division of enforcement, says. "The SEC is committed to identifying and holding accountable those who violated the law and harmed investors through sub-p...