SAN FRANCISCO/BOSTON (Reuters) - Bank of New York Mellon was sued by a Pennsylvania transit authority this week in the latest legal skirmish over foreign exchange trading.
BNY Mellon and State Street Corp have been accused of overcharging pension systems for transactions such as swapping dollars for euros or yen to buy and sell international securities.
Attorneys general in three states have now stepped in to lead whistleblower cases. Class actions by other pension funds have also hit the courts. The banks reject accusations of wrongdoing.
A proposed class action against BNY Mellon, filed in a Philadelphia federal court on Monday, incorporates allegations made in whistleblower lawsuits in Florida and Virginia and claims BNY Mellon charged “false” forex rates.
BNY Mellon spokesman Kevin Heine said that each morning, the bank provides a rate range to its clients and offers an opt-out so they can switch to a different forex provider if they choose.
“We will vigorously defend ourselves against the suit’s false allegations,” Heine said.
The lawsuit was brought by a BNY Mellon client, the Southeastern Pennsylvania Transportation Authority, which retained BNY Mellon to provide custodian services for its pension plan.
SEPTA claims it did not know about BNY Mellon’s practices until the Florida and Virginia lawsuits were unsealed.
The proposed class action seeks to represent all impacted BNY Mellon clients, except those in the whistleblower lawsuits. SEPTA says the class claims exceed $5 million.
The case in U.S. District Court, Eastern District of Pennsylvania is Southeastern Pennsylvania Transportation Authority v. The Bank of New York Mellon Corporation, 11-01628.
Reporting by Dan Levine and Ross Kerber; Editing by Tim Dobbyn and Matthew Lewis