State Street Corp. chief executive Jay Hooley said he favors stricter trading rules following last week’s disclosure of a $2 billion derivatives loss by JPMorgan Chase & Co. Hooley spoke during an annual shareholders meeting Wednesday that was interrupted several times by protesters.
Hooley said Boston-based State Street, which manages pension assets and is custodian for large investment funds, does not engage in the kind of proprietary trading that is targeted by the much-debated Volcker Rule, part of the federal Dodd-Frank legislation. The rule — which is not scheduled to be implemented until 2014 — requires institutions to keep risky trading operations separate from banking business.
In response to questions from shareholders during the meeting at State Street’s downtown headquarters, Hooley said he is “all for” financial reforms. In particular, he supports creating a central clearinghouse for derivatives — complex investments based on the movements of other stocks, bonds, or indexes — and other changes to ensure the safety and soundness of the nation’s financial system.
“The industry has lost a lot of confidence in the eyes of investors and the public,’’ he said.
Hooley’s remarks came after a series of interruptions during what is normally a staid annual meeting. Dozens of protesters from MassUniting, a coalition of community, faith, and labor groups, held a rally outside in the rain, and some spoke out during the meeting, chanting, “Pay your fair share,” “Stop killing jobs,” and “Stop ripping off our pensions.”
Hooley, who initially appeared rattled by the uproar, tried to quiet the protesters and threatened to have them removed. After each outburst, security guards escorted out small groups of protesters.
“What are you going to do for poor people in our community?” asked Gladys Vega, executive director of the Chelsea Collaborative, a community organizing group. Vega cited the $2 billion in federal bailout funds State Street received in 2008 — money it has since paid back — and the large tax refund the firm received in 2010 after losses on bad investments. “We are tired of coming and begging,” she said.
In response, Hooley said State Street is “committed to improvement in this city.” The company said that its foundation gave $20.5 million in grants last year to such nonprofits as City Year Boston, a youth organization, and that State Street employees volunteered 85,000 hours of time globally.
MassUniting members also alleged that State Street has outsourced thousands of jobs, defrauded pension funds, invested in for-profit prison companies, and lobbied lawmakers on issues that hurt consumers.
Hooley defended State Street’s employment practices, saying it has increased its workforce in Massachusetts by 23 percent over the last five years.
It currently has 12,370 employees here, and 29,000 worldwide. He acknowledged the company shifts jobs to other cities and countries when it makes sense strategically.
Hooley also responded to criticism about State Street’s handling of pensions, mainly concerning foreign-exchange overpricing allegations that have led to lawsuits in several states. “We in no way defraud pension systems,” he said.
Regarding its investments in a for-profit prison company, Corrections Corp. of America of Nashville, he said State Street’s investment arm owns shares in the company because it’s part of the Standard & Poor’s 500 Index.
“We don’t make judgments about any individual corporation” that is part of the index, he said.
When an audience member urged him to reconsider that position, Hooley refused to budge.
“We’re not going to,” he said.
Beth Healy can be reached at bhealy@globe.com.