NEW YORK Prosecutors and the Bank of New York Mellon Corp have reached a partial settlement over civil fraud charges brought by the government last year accusing the bank of overcharging clients for trading currencies, according to court documents filed on Tuesday.
Under the settlement, the two sides said, the bank would disclose how it determines prices for certain transactions. There was no mention of a monetary settlement, but the court documents said the parties were continuing discussions.
The government sought hundreds of millions of dollars in civil penalties.
"The parties intend to continue litigating the Government's claim for civil penalties," the office of Manhattan U.S. Attorney Preet Bharara said in a statement. "Accordingly, nothing in the settlement releases claims of the United States, and BNYM likewise denies liability."
The settlement comes three months after Manhattan federal prosecutors and New York state's attorney general filed separate lawsuits on the same day, increasing pressure on the bank after years-long investigations into whether banks were charging too much for foreign exchange transactions.
On Tuesday, the bank and federal prosecutors asked U.S. District Judge Lewis Kaplan to approve the partial settlement. The judge granted the government's request to file an amended complaint in the next 30 days.
The bank, which initially said it would fight the lawsuits, said on Tuesday that it had had "a constructive dialogue" with prosecutors.
"While we are confident that we have provided our clients and their investment managers with the information needed to make informed trading decisions, this agreement addresses disclosure questions raised by the U.S. Attorney and is consistent with our ongoing commitment to implement enhancements that will benefit our clients," Bank of New York Mellon Corp spokesman Kevin Heine said in a statement.
The agreement calls for the bank to change the disclosures it provides to clients about its foreign exchange services. It must disclose how transactions executed through its standing instruction foreign exchange service are priced, and must make certain pricing data available to its custodial clients on a periodic basis.
The bank may no longer describe the standing instruction service as "free," or represent that the service applies "best execution" standards.
A similar suit filed by New York Attorney General Eric Schneiderman against Bank of New York Mellon over allegations the bank defrauded clients in foreign currency transactions is still pending in New York state Supreme Court in Manhattan. Danny Kanner, a spokesman for Schneiderman, declined comment Tuesday on that suit.
The case is USA v The Bank of New York Mellon Corp in the United States District Court for the Southern District of New York, No. 11-06969
(Reporting By Grant McCool and Karen Freifeld in New York; Editing by Steve Orlofsky)