Eric Schneiderman is going after another financial scalp, announcing this afternoon that, along with the City of New York, he is suing Bank of New York Mellon for defrauding clients in foreign currency exchange transactions.
The complaint alleges that over a 10-year period, BNY Mellon consistently misrepresented to customers the rates it would give foreign currency transactions. Instead of providing the best interbank rates BNY Mellon allegedly gave the worst or nearly the worst rates of the trading day, making nearly$2 billion from these trades.
Among the victims, Mr. Schneiderman’s office says, were the pension funds of New York City Employee Retirement System, the Teachers Retirement System of the City of New York, the New York City Police Pension Fund and the New York City Fire Department Pension Fund and the State University of New York.
This landmark case uncovered a fraud committed against both government and private pension funds,” Executive Deputy Attorney General Karla G. Sanchez said. “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.”
According to a release from the AG’s office, BNY Mellon guaranteed customers that they would receive the “best rate of the day” or the “most competitive/attractive FX [foreign exchange] rates available to us” and claimed to monitor exchanges agents “to ensure that the best rate is attained for our clients.”
Instead, the bank provided customers the worst or nearly the worst of the pricing rates available that day.
The case began when a whistleblower filed a complaint with the Attorney General’s office.
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