BNY Mellon is facing separate lawsuits from both the state of New York and the U.S. government for allegedly defrauding state and other pension funds through its foreign exchange fees over the past 10 years, according to The New York Times.
A civil suit filed by New York state attorney general Eric Schneiderman contends that BNY Mellon consistently overcharged customers for processing foreign currency trades. The suit seeks $2 billion on behalf of state pension funds affected by the inflated fees.
A civil suit filed by U.S. attorney Preet Bharara in Federal District Court in Manhattan accuses the bank of cheating customers on currency transactions. Bharara, who filed suit under the Financial Institutional Reform, Recovery and Enforcement Act, which allows federal prosecutors to seek civil penalties for banking-related violations, is seeking hundreds of millions of dollars in penalties on behalf of the U.S.
BNY Mellon issued separate statements strongly denying any wrongdoing. The bank says Bharara’s claims are based on “flawed analysis” of its role as a principal in the foreign exchange market, and it accuses the New York attorney general’s lawsuit of “prosecutorial overreach.” The New York Times reports that BNY contends its foreign exchange rates were both competitive and attractive.
BNY Mellon has faced lawsuits previously filed for similar reasons by attorneys general in six other states. The Times reports that the Securities and Exchange Commission and Justice Department are also conducting investigations into the matter.