Judge Approves $335 Million Settlement Between BNY Mellon, Pension Funds Over Alleged Foreign Currency Fraud

A New York judge on Thursday approved a $335 million settlement, originally reached in March, between BNY Mellon and a number of the bank’s clients.

The settlement is the result of a class action lawsuit, led by several pension funds, filed against the bank for allegedly overcharging clients on foreign exchange deals.

More on the settlement from Bloomberg:

U.S. District Judge Lewis Kaplan Thursday allowed the settlement to go forward, paving the way for 1,200 clients to receive payments from the bank within 30 days. BNY Mellon agreed to the settlement as part of a larger $714 million resolution with the U.S., New York state, regulators and clients. Kaplan’s decision resolves investors’ class-action claims against the bank.

BNY Mellon promised investors the best rates on foreign-exchange deals, then overcharged them and pocketed the difference, according to the lawsuit. New York Attorney General Eric Schneiderman claimed the bank made $2 billion over 10 years. BNY Mellon agreed to fire executives involved in the alleged fraud, as part of its settlement with the U.S. and New York.

The suits followed investigations by states into whistle-blower claims of fraud.

“This is great news for the class,” Elizabeth Cabraser, a lawyer for the investors, told Kaplan after he approved the settlement.

Several pension funds, including the Ohio Police & Fire Pension Fund and the School Employees Retirement System of Ohio, were among the lead plaintiffs and stand to recover a few million from the settlement.

Photo by Sarath Kuchi via Flickr CC License