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October 05, 2011 at 09:31 AM
The Justice Department and New York Attorney General Eric Schneiderman filed lawsuits Tuesday against the Bank of New York Mellon for allegedly defrauding clients in foreign currency exchange transactions.
The lawsuit seeks to recover the profits BNY Mellon earned “by deceiving its customers. The victims include both public and private pension funds, including those of the New York City Employee Retirement System (NYCERS) and the State University of New York.
“Over a 10-year period, BNY Mellon consistently misrepresented to customers the rates it would give foreign currency transactions,” according to the suit. “Instead of providing the best interbank rates–as it promised–BNY Mellon gave the worst or nearly the worst rates of the trading day. The Bank made nearly $2 billion from these trades, accounting for over 65 percent of its foreign exchange revenues.”
The New York attorney general’s office also weighed in. “This landmark case uncovered a fraud committed against both government and private pension funds,” Executive Deputy Attorney General Karla Sanchez said in a statement. “This office will continue to commit its full resources to hold those responsible accountable, seek restitution for the victims, ensure that our markets are fair and transparent, and uphold one set of rules for all market participants.”
