The world’s largest custody bank, Bank of New York Mellon (BNY Mellon), is reportedly facing separate lawsuits from both the US Department of Justice and the city and state of New York.
The lawsuits centre on the allegation that for ten years, BNY Mellon has through currency transactions, defrauded US banks, pension funds and millions of investors throughout the US. The company is accused of systematically overcharging clients by purchasing and selling foreign currencies at the worst rate on the day of the trade, instead of using the market price at the time of the trade. The bank is alleged to have pocketed the difference, and is accused of doing so for a period of ten years or more.
The plaintiffs in the case are seeking to recover over $2 billion of the custody bank’s allegedly ill-gotten gains.
This latest action is in addition to federal lawsuits from both Florida and Virginia states, which began proceedings to sue the company in August. BNY Mellon, however, is likely to have substantial professional indemnity insurance in place to fight the case and cover any costs if it is unsuccessful in its defence.