(Reuters) - Two Oregon pension funds will lead shareholder litigation accusing Bank of New York Mellon Corp of overcharging clients on foreign currency exchange transactions.
The largest U.S. custodial bank has faced a variety of lawsuits as well as state and federal probes arising from allegations it set unfavorable prices on the transactions, allowing it to profit at the expense of state and local pension funds.
Shareholders claimed that Bank of New York Mellon misled them about the sustainability and profitability of its foreign exchange trading activity, and that its share price fell as news about the alleged deceptive practices became known.
U.S. District Judge Lewis Kaplan in Manhattan on Thursday named Oregon’s treasurer, acting on behalf of the Common School Fund, and the Oregon Public Employee Retirement Board as lead plaintiffs in the case. He also named the law firm Bernstein Litowitz Berger & Grossmann as lead counsel for the plaintiffs.
The shareholders are seeking class-action status on behalf of purchasers of Bank of New York Mellon shares between February 28, 2008 and August 11, 2011. The share price fell by roughly 56 percent over this period.
Kevin Heine, a bank spokesman, declined to comment on Thursday’s order. The bank has previously said the shareholders’ claims have no merit.
Gerald Silk, a lawyer for the lead plaintiffs, did not immediately respond to a request for comment.
Custodial banks provide back-office and other services including accounting, currency trading, portfolio servicing, stock lending, and valuing assets.
In January, Bank of New York Mellon reached a partial settlement with the Justice Department of civil fraud charges related to how much it charged clients on currency trades. No agreement had been reached on civil penalties.
Other large custodial banks including JPMorgan Chase & CO, State Street Corp and Northern Trust Corp.
The case, whose caption still names a different pension fund as plaintiff, is Louisiana Municipal Police Employees’ Retirement System v. Bank of New York Mellon Corp et al, U.S. District Court, Southern District of New York, No. 11-09175.
Reporting by Jonathan Stempel in New York; Editing by Gary Hill