BNY Mellon forex suits put under one court roof
NEW YORK (Reuters) - Eight federal court lawsuits accusing Bank of New York Mellon Corp of routinely overcharging clients on foreign exchange trades have been moved to Manhattan federal court at the custody bank's request.
The cases were transferred on Monday by the United States Judicial Panel on Multidistrict Litigation, according to an order made public on Tuesday. The panel said it found common questions of fact in cases filed in New York, California and Pennsylvania.
"All actions share factual issues arising from allegations concerning BNY Mellon's provision of foreign exchange services to its clients," the order said.
BNY Mellon and State Street got into trouble by promoting seemingly lower wholesale-type pricing on small, retail-size forex trades called standing instruction transactions. So-called negotiated trades, used by larger forex traders, account for most of the banks' volume, but standing instructions are usually much more profitable.
Pension funds in California, Florida, Massachusetts, New York and Virginia, for example, claim the banks got their high profit margins by loading them up with hidden price markups. Both banks have said those claims have no merit.
In January, Bank of New York Mellon Corp and federal prosecutors in New York reached a partial settlement over civil fraud charges brought by the government last year accusing the bank of overcharging clients for trading currencies.
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 case is Clark et al v Hassell et al in U.S. District Court for the Southern District of New York No. 12-md-02335.
(Additional reporting by Tim McLaughlin; Editing by Tim Dobbyn)
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