FAIRFAX, Va. (Legal Newsline) - A Virginia judge has reportedly thrown out a lawsuit in which state Attorney General Ken Cuccinelli sought to make Bank of New York Mellon pay the State nearly $1 billion.
A Dow Jones Newswires report that was published May 1 in the Wall Street Journal said Judge Terrence Ney had dismissed the lawsuit. Cuccinelli filed his complaint in August in Fairfax County Circuit Court, alleging that bank currency traders misreported the interbank rate at which foreign currency was exchanged during transactions conducted on behalf of six public pension funds.
The alleged scheme allowed the bank to take a profit off each transaction and resulted in a whistleblower's lawsuit. Cuccinelli later brought his case under the Virginia Fraud Against Taxpayers Act.
"The Bank of New York has a fiduciary responsibility to its clients to be fully transparent about the actual costs of its currency trades versus what it was charging the funds," Cuccinelli said after filing his case.
"To hide the actual costs and essentially skim money off the top of every transaction is unconscionable."
Cuccinelli estimated the bank caused $40 million in damages and wanted thrice that amount, plus civil penalties in the amount of $811,624,000. He arrived at that figure by multiplying 73,784 (the number of foreign currency trades executed) by $11,000.
"We are pleased that the Virginia Court dismissed the entire case against us, vindicating our position that the claims were without merit," a bank spokesperson told the WSJ.
"(T)he court's decision rejected the plaintiffs' opportunity for the significant financial penalties associated with these claims. We will defend vigorously the remaining claims against us."
In addition to Cuccinelli's office, Virginia was represented by the firms Sands Anderson and Labaton Sucharow.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.