(Reuters) - Bank of New York Mellon Corp on Friday reached a $28 million settlement with Florida to resolve allegations that the bank overcharged a state pension plan for foreign currency transactions.
Florida Attorney General Pam Bondi said the accord provides “full compensation” for the state’s past currency trades, and ensures complete transparency on the pricing of future trades.
Bank of New York Mellon did not admit wrongdoing, according to settlement papers.
The case is one of several in which federal and state regulators, customers and shareholders accused custodial banks of defrauding clients through overcharges on currency trades.
Bondi called the settlement “substantial,” and said it also covered investments made on behalf of the Florida plan in medium-term notes issued by Sigma Finance Inc, which defaulted in September 2008 and later went into receivership.
“We’re pleased that the Florida attorney general is withdrawing her lawsuit,” Bank of New York Mellon spokesman Kevin Heine said. “We’re also pleased to have reached an agreement with the State Board of Administration of Florida that allows us to continue our long-standing relationship. We view this as a commercial matter, and have taken a pragmatic approach to resolving the issues.”
Custodial banks provide back-office and other services including accounting, asset valuation, currency trading, portfolio serving and stock lending.
Florida’s lawsuit was originally brought by a whistleblower. The state joined the case in 2011.
Bank of New York Mellon has faced other lawsuits over alleged overcharges on currency trades.
In April, U.S. District Judge Lewis Kaplan in Manhattan said the U.S. government may pursue a lawsuit accusing the bank of misrepresenting that it would provide “best execution” to various trading clients.
But in July, Kaplan dismissed a lawsuit by shareholders who accused bank officials of ignoring “red flags” or knowing that trades were processed at unfavorable prices.
Reporting by Jonathan Stempel in New York; Editing by John Wallace and Tim Dobbyn