Prudential Retirement Insurance and Annuity Company, the US life insurer, has filed a complaint against Boston-based custodian State Street and its fund management division State Street Global Advisors, claiming it acted deceptively and imprudently when two of its bond funds declined by as much as 25% in July and August as a result of investments in mortgage securities.

The funds, known as the intermediate bond fund and the government bond fund, were allegedly described by State Street as "enhanced bond index" funds that sought "stable, predictable returns" slightly above an index consisting of investment-grade US government and corporate bonds, according to the complaint document.