(September 21, 2011) — The director of the City of Boston’s $3 billion retirement fund has said it was overcharged by State Street.

The assertions by the scheme followed a review of foreign-currency trading services, the Boston Globe reported. The Boston Retirement Board, which is working with the state attorney general’s office on the matter, hired an outside company to analyze the trading costs.

The City of Boston retirement scheme failed to say how large the overcharges might be, according to the Globe.

Meanwhile, the state’s $50 billion pension fund has already alleged it was overcharged $29 million over the course of a decade by State Street’s rival, BNY Mellon. In June, State Treasurer Steven Grossman claimed the custodial bank overcharged Massachusetts Pension Reserves Investment Management (MassPRIM) by tens of millions of dollars on foreign exchange (FX) trading since 2000.

BNY Mellon denied the accusations. “We reject the notion that [MassPRIM] was ‘overcharged,’” the bank said in a statement. “We value our client relationships and are confident that we offer our clients and their investment managers competitive and attractive FX pricing.”

The Securities and Exchange Commission (SEC), along with several state attorney generals and other regulators, began investigations earlier this year into both BNY Mellon and State Street, which have been accused of preying on public pension funds that lack the resources to maintain proper oversight on FX trades.

Regarding the pricing of its foreign-exchange transactions, State Street has already been sued by California and the Arkansas Teacher Retirement System for alleged fraud. Filed in early February in the US district court in Boston, the suit alleged that State Street, the custody bank for more than 40% of US public pension funds, violated state law by overcharging customers for currency trades. According to the suit, the bank generated as much as $500 million in profits annually — a rate of profit that accounts for about 50% of State Street’s foreign exchange profits over the last decade. In response, State Street said the Boston-based company is “firmly committed to providing its clients with quality service and transparency in meeting their FX needs. We will vigorously defend the allegations made in the complaint and we stand by our business practices.”