Over a 10-year period, Bank of New York Mellon
From 2001 to the present, the bank engaged in a multi-pronged campaign of deception designed to induce private and government clients into believing that they would receive the best rate of the day for their foreign currency transactions, the suit said.
In reality, the suit alleged, BNY Mellon priced the transactions at the worst rate or nearly the worst of the day. BNY Mellon then pocketed for itself the difference between the worst price of the day and the market price existing at the time it executed the transaction, according to the suit.
A BNY Mellon spokesman said in a statement that the lawsuit was based on a fundamental misunderstanding of the foreign exchange market and the role of custodian banks.
Simply put, this is the kind of prosecutorial overreach that ill serves New York, New Yorkers and the pension funds that the Office of New York Attorney General purports to represent, said the spokesman.
The lawsuit, filed in New York state court, is seeking to recover nearly $2 billion for BNY Mellon clients nationwide.
According to the lawsuit, BNY Mellon made misrepresentations to some of the most recognizable corporations, investment funds, educational institutions, pension funds, and governmental organizations in the world, including Microsoft Corporation
New York is the latest state to bring claims against BNY Mellon, which has been battling allegations of FX overcharging for months. Virginia and Florida filed lawsuits against the company in August.
The New York Attorney General said the suit, which was brought with the city of New York, adds new claims to an existing whistleblower action that was filed under seal by FX Analytics in 2009.
The suit makes claims of violations of New York's Martin Act, a powerful statute from the 1920s that has been used to investigate and prosecute securities fraud on Wall Street. On behalf of defrauded clients who were New York city and state entities, the suit also makes claims that the BNY Mellon violated the New York city and state False Claims Acts.
The case is State of New York v. The Bank of New York Mellon Corporation, New York State Supreme Court, New York County, No. 09/114735.
(Reporting by Andrew Longstreth in New York; additional reporting by Dan Levine in San Francisco; Editing by Bernard Orr, Gary Hill)