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Bank of New York Mellon Faces Whistleblower Lawsuits for Currency Transactions Involving Pension Funds

above-the-bar-logo-no12.jpgBank of New York Mellon Corp. (“BNY Mellon”) recently got hit with a qui tam whistleblower lawsuit in New York for improperly charging pension funds for foreign exchange transactions. In order to hide their identity, the whistleblowers are using a shell company named FX Analytics, a Delaware partnership, to bring the lawsuit. The lawsuit is under seal and the specific allegations are not public.

FX Analytics has already filed similar suits against BNY Mellon in Virginia and Florida, where both state’s attorneys general have intervened. The Virginia lawsuit seeks damages of over $150 million. BNY Mellon holds $55 billion in funds for the Virginia Retirement System and other smaller amounts for local government funds. For its services, Virginia pays BNY Mellon an annual fee of $4.5 million. According to FX Analytics, the bank is supposed to use its foreign exchange system to handle purchases and sales of foreign currency for the state, but has “knowingly and intentionally” charged the state “false exchange rates” for purchases and sales of foreign currency. This has resulted in the state paying more for buys and getting less for its sales.

BNY Mellon is one of the nation’s largest custody banks by global assets. In other words, it acts as a custodian for investment firms’ securities, which includes handling currency trades for institutional investors. For example, it handles foreign currency transactions on international investments that are held by large pension funds. However, instead of taking into its client’s best interests, it has been profiting from large revenues from foreign exchange trading.

It is an outrage that BNY Mellon has been profiting from foreign exchange transactions using state pension funds. Since the government does not have enough resources to detect all fraud being committed against it, it is every taxpayer’s job to watch out for fraud being committed against the government. Thanks to whistleblower statutes, a private individual or group with knowledge of fraud being committed against the government can bring suit on the government’s behalf. A whistleblower can recover up to 15 – 25% of the recovery if the government intervenes and takes over the lawsuit and up to 24% – 30% if the government does not intervene. However, you must be the first person to bring the evidence of fraud to the government’s attention.

If you have observed fraud being committed against the government or other fraud in the workplace, call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you decide if you have a qui tam whistleblower case under the False Claims Act.


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