Embattled custody bank BNY Mellon is reportedly still in negotiations over the lawsuit filed by federal prosecutors regarding the bank’s foreign exchange (“forex”) rate practices. The lawsuit, filed by Manhattan U.S. Attorney Preet Bharara, aims in part to discover BNY’s methods for disclosing pricing for forex transactions. A judge granted a one-week extension on January 9th, and warned that “parties should not expect another extension from the court.”

Bharara is also seeking millions in damages. The terms of any settlement reached in this case will likely shape later decisions on similar cases pending against BNY and other custody banks across the United States. In total, state and other pension funds are seeking more than $2 billion, allegedly lost by institutional clients due to unfair forex rates. So far, BNY has repeatedly denied any wrongdoing.

BNY had already tried to have the lawsuit filed by New York State dismissed. In a court filing, the bank stated that it was always upfront about the rates applied to preauthorized forex transactions: “A party that knows exactly what it is getting, and at what price, cannot, as a matter of law, have been defrauded.” If the bank made a profit, BNY contended that it “had no duty to disclose it.”

In November, BNY scored a partial victory in Virginia after a circuit court judge threw out two out of three types of claims against the bank. In a statement, BNY Mellon said that “We are pleased that the court dismissed two of the three remaining claims brought by [Virginia] and we are gratified that the judge scheduled a prompt hearing on the one remaining claim.” The remaining claim accuses BNY Mellon of intentionally creating false forex pricing reports in violation of the Fraud Against Taxpayers Act.

Read more about the BNY forex lawsuits.
photo credit: openDemocracy