Bernie Madoff whistleblower Harry Markopolos is back in the news, this time taking on the banking sector over the fees they charge in retirement plans.
Appearing on The Daily Ticker on Friday, Markopolos (left) says BNY Mellon (BK) and State Street (STT) are taking about “three tenths of a percent from every forex transaction for pension funds” by back-timing the trade to benefit banks at the detriment of their pension fund clients. “It’s almost the exact same scheme as the market timing scandals of 2003,” according to a transcript of the interview.
The comments came in response to a Wall Street Journal article, published on Aug. 12, that said “Attorneys general in Virginia and Florida filed civil suits against BNY Mellon alleging that the bank cheated pension funds in those states by choosing improper prices for currency trades the bank processed for the funds.”
The Journal goes on to report, “The Virginia lawsuit, filed in a Fairfax, Va., state court, cites internal bank emails allegedly showing that senior bank officials knew about, and endorsed, a currency-trading method that hurt state pensioners. In addition to Virginia and Florida, California and Tennessee are also suing BNY Mellon and State Street Corp. over the alleged fraud.”
Markopolos (whom Investment Advisor magazine named in May 2010 as one of the top 30 most influential people in the advisor business for the past 30 years) told The Daily Ticker he expects all 50 states to eventually join the suit, and reiterated his previous statement that big banks are worse than Madoff.
Markopolos said he hopes a settlement is avoided, according to the interview.
“I want to see them admit guilt,” he says. “If [banks] settle it feels like justice denied because they also will settle without admitting or denying guilt. That’s just too easy.”
Markopolis made similar comments to the Huffington Post in February when the issue first surfaced.