New York Attorney General Eric Schneiderman (pictured) and U.S. Attorney for the Southern District of New York Preet Bharara recently reached a $714 million settlement with the Bank of New York Mellon over consumer fraud cases. New York Attorney General
The Bank of New York Mellon will pay approximately $714 million to settle cases brought against it by the New York State Office of the Attorney General and the U.S. Attorney's Office, New York Attorney General Eric Schneiderman and U.S. Attorney for the Southern District of New York Preet Bharara said last week.
The cases involved fraudulent foreign-exchange practices in which Bank of New York Mellon admitted that it had promised clients that they would get the best prices on daily foreign-exchange transactions, but instead received "at or near the worst interbank rates reported during the trading day," Bharara said.
The bank not only faced federal and state government cases, but also private cases and investigations by the U.S. Securities and Exchange Commission and U.S Department of Labor. In addition to the financial settlement, the bank agreed to terminate certain executives who were involved in the fraud. It also agreed to reform practices to increase and improve information available to customers, Schneiderman said. Finally, the bank also agreed to waive deductibility of New York State and local taxes.
Schneiderman said the settlement would serve as a warning that other financial institutions that are responsible for defrauding consumers will “be held accountable and face serious consequences for their wrongdoing.”
“Investors count on financial institutions to tell them the truth about how their investments are being managed,” Schneiderman said. “But Bank of New York Mellon misled customers and traded at their expense. The outcome also shows what can be achieved when law enforcement agencies collaborate on an important matter such as this one.”
New York State will receive about $167.5 million of the settlement, which Schneiderman said would be directed to the bank's customers who were victims of the fraud.