ALBANY, N.Y. - New York Attorney General Eric Schneiderman sued Bank of New York Mellon for $2 billion yesterday, claiming it earned that amount over 10 years by defrauding clients in foreign currency exchange transactions.
According to Schneiderman’s office, BNY Mellon misrepresented rates it would give currency transactions, providing nearly the worst rates of the trading day instead of the best. The case began with a 2009 whistle-blower complaint followed by an investigation. Clients include public pension funds.
New York City jointed in the lawsuit.
The bank said the lawsuit was “prosecutorial overreach’’ based on “a fundamental misunderstanding’’ of the role of custodian banks in the global foreign currency market.
In Massachusetts, after a review by an outside firm, the director of the City of Boston’s retirement fund has said it was overcharged by State Street Corp. for foreign-currency trading services. The retirement board said it is working with the state attorney general’s office on the matter. Also, the state pension fund has alleged that it was overcharged $29 million over a decade by Bank of New York Mellon Corp.
State Street and Bank of New York Mellon have denied wrongdoing in the Massachusetts allegations.