Bank of New York Mellon Agrees To Pay $714 Million to Resolve Federal and State Allegations
Bank of New York Mellon Agrees To Pay $714 Million to Resolve Federal and State

Bank of New York Mellon has agreed to pay $714 million to settle federal and state allegations. The allegations are that the bank defrauded pension funds and other clients by wrongly representing how it managed their foreign exchange transactions.

According to the US Department of Justice and New York's top legal official, the investment services and management company said that it wrongly informed customers that it would give them the `best rates' available in a process. The process was designed to maximize the proceeds of every trade in the foreign currency exchange market.

Investigators said that rate fluctuations have been monitored by the Manhattan-based firm all through trading days and after that the worst or close-to-worst rates were assigned to clients from trading sessions. Simultaneously, Bank of New York Mellon received more positive rates for its own foreign exchange trades. It also received profit from the difference between those rates and the higher rates assigned to customers.

"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", said Manhattan US Attorney Preet Bharara.

According to New York Attorney General Eric Schneiderman, the settlement shows that individuals and institutions that are accountable for defrauding investors will face serious consequences for their wrongdoing. The settlement includes allegations raised by both investigative agencies.

The settlement also involves actions by the Securities and Exchange Commission and the US Department of Labor and class-action lawsuits filed by private customers. Bank of New York Mellon said that they will continue to enhance their product offerings to fulfill clients' demand.




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