State pension board cuts BNY Mellon’s role

Bank was accused of overcharging

By Beth Healy

Globe Staff / December 7, 2011

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The Massachusetts state pension fund board yesterday voted to hire a new firm to handle some foreign-exchange trades, Russell Implementation Services, to cut costs on smaller currency trades related to overseas investments. Fund officials made the move following allegations that the pension plan’s custodian bank, Bank of New York Mellon Corp., had overcharged the state more than $29 million on foreign exchange over a decade. Fund officials estimated the new program would save at least $1.2 million in fees.

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$1.2 million
Amount State Treasurer Steven Grossman says should be saved under the new program.
$500,000
to $1 million
Amount saved in the third quarter by putting more pressure on investment managers to negotiate currency trades instead of leaving “standing instructions” with the bank to handle them.