Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich January 19, 2012

BNY Mellon has reached a partial settlement with the the U.S. Attorney’s office in connection with charges that the custody bank defrauded large institutional customers, including several state pension funds, by overcharging them for foreign exchange (“forex”) transactions.

This settlement addresses only the section of the case aimed at forcing BNY to reveal its methods for deciding forex exchange rates for each customer. The bank has agree to disclose how it formulates exchange rates for customers who buy and sell foreign securities or receive foreign dividends.

According to the initial complaint, federal officials believe that the bank selects rate at the outer margins of the interbank rate and made money on the difference. BNY has also agreed to stop representing to customers that they were getting “best execution” prices. A spokesperson for the bank characterized the settlement negotiations as “constructive” and said that BNY is still “confident that we have provided our clients and their investment managers with the information they need to make informed trading decisions.”

BNY and federal prosecutors did not reached an agreement on the other section of the lawsuit. The Justice Department is seeking hundreds of millions in civil monetary penalties for defrauding customers, and will continue to contest this part of the case.

Read more about the BNY Mellon lawsuit.
Creative Commons License photo credit: Aidan Jones

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