(May 2, 2012) — BNY Mellon won the dismissal of a lawsuit claiming the world’s largest custody bank defrauded pension funds, including the $54 billion Virginia Retirement Systems, on foreign-exchange trades.
A Virginia state judge dismissed the lawsuit earlier this week that accused BNY Mellon of overcharging pensions in the state on foreign exchange trades, Reuters initially reported. Virginia Attorney General Kenneth Cuccinelli sued BNY Mellon in August 2011. He asserted the bank violated state law by charging “undisclosed markups” on currency-exchange trades. Virginia was seeking over $800 million in damages.
According to the news agency, Fairfax County State Judge Terrence Ney said the pension funds, including the $54 billion Virginia Retirement System, lacked evidence that they submitted claims for payment relating to their allegations of overcharging on FX trades. The judge asserted that a fundamental part of proving a fraudulent action under the Virginia Fraud Against Taxpayers Act is a claim for payment.
“We are pleased that the Virginia Court dismissed the entire case against us, vindicating our position that the claims were without merit,” BNY Mellon spokesman Kevin Heine told aiCIO. “This decision and the recent dismissal of similar whistleblower claims in California, underscore our long held belief that these cases will not withstand legal scrutiny. We remain focused first and foremost on providing valuable services to our clients, evolving our products to meet client needs, and doing all we can to earn their continued trust.”
Meanwhile, in January, BNY Mellon agreed to a partial settlement with the Justice Department to change aspects of its disclosure policy relating to its foreign exchange services. The bank agreed to disclose additional information on transaction pricing.
“Foreign exchange and other trading revenue totaled $228 million compared with $258 million in the fourth quarter of 2010 and $200 million in the third quarter of 2011,” BNY Mellon reported earlier this year. “In the fourth quarter of 2011, foreign exchange revenue totaled $183 million, a decrease of 11% year-over-year and 17% sequentially. Both decreases resulted from lower volumes. The year-over-year decrease was partially offset by higher volatility, while sequentially, volatility decreased.”