Daily Management Review

BNY Mellon to pay $714 million to settle Forex trade suit


03/20/2015




The Bank of New York Mellon has agreed to pay $714 million to resolve federal and state allegations that it defrauded pension funds and other clients.

The company, while agreeing to the compensation, admitted that it misled clients by telling them that they would provide the best rates available in a process designed to "maximize the proceeds of each trade" in the foreign currency exchange market. This misrepresentation by the investment services and management company has led to the clients getting assigned the worst or close-to-worst rates from trading sessions, according to the investigators in the case.

Even while Bank of New York Mellon was misleading its clients, the company itself got more favorable rates for its own foreign exchange trades and profited from the difference between those rates and the higher rates assigned to customers. All the questionable transactions by the company happened in 2012.

The US attorney in the case Preet Bharara said: "The Bank of New York Mellon's custody clients, many of whom are public pension funds and non-profit organizations, trusted the bank to be honest about the financial services it was providing and to deal with them fairly. BNYM and its executives, motivated by outsized profits and bonuses, breached this trust and repeatedly misled clients."

The company’s settlement will cover all allegations raised by both investigative agencies, as well as related actions by the Securities and Exchange Commission and the U.S. Department of Labor, plus class-action lawsuits filed by private customers. The company has noted that this settlement will resolve all the issues related to this misrepresentation case.

"We are pleased to put these legacy matters behind us, which is in the best interest of our company and our constituents. We continue to improve our product offerings to ensure they are meeting client demand and positioning clients to succeed in an increasingly complex financial environment," the company said in a formal statement.

Bank of New York Mellon has $28.5 trillion in assets under custody and/or administration, along with $1.7 trillion in assets under management.






Science & Technology

China's first solar power molten salt plant sets record

WSJ announces imminent start of Boeing 737 MAX flight tests

Study: Machine learning is five times more harmful for the environment than a car

Would Singapore Be The First One To Bring Lab Grown Shrimps To The Global Market?

Apple Patents A ‘Foldable Screen’ For Creating Foldable iPhones

Research Shows Air Pollution Causing Birth Defects

Microsoft tells about operating system of the future

Study: Third of US kids wake up at night to check their smartphones

Deepfake AI Technology Used By Researchers To Bring Mona Lisa ‘To Life'

China is developing technology to capture greenhouse gases

World Politics

World & Politics

All EU Commission Candidates Fail To Garner Enough Support

Trump ponders termination of military agreement with Japan

‘Major Additional Sanctions’ On Iran Would Be Imposed By US: Trump

‘Climate Neutrality Must Be Achieved By 2050’: The EU Bloc Leaders

All Out US-Iran War Unlikely After Downing Of American Drone, Say Analysts

A number of airlines stop flights over the Strait of Hormuz

Former UEFA President detained to testify in a corruption case

European defense: technological choices underlying political ones