BNY Mellon in settlement on currency fraud charges

AP News
Posted: Jan 18, 2012 11:13 AM
BNY Mellon in settlement on currency fraud charges

Bank of New York Mellon and the Justice Department have reached a partial settlement of charges that the bank defrauded customers by offering them unfavorable rates on currency transactions.

Under the settlement, announced Tuesday by the top federal prosecutor in Manhattan, the bank must disclose how it comes up with currency exchange rates for customers who buy and sell foreign securities or receive foreign dividends.

A federal lawsuit filed in October alleged that the bank provided customers exchange rates at the outer margins of what banks offer to each other and made money on the difference, known as a spread.

Bank of New York Mellon agreed to stop telling customers that they were getting "best execution" prices.

Federal prosecutors have sought hundreds of millions of dollars in civil penalties against the bank. The Justice Department and the bank will continue contesting that part of the lawsuit.

Bank of New York Mellon said it had a "constructive dialogue" with prosecutors and was "confident that we have provided our clients and their investment managers with the information they need to make informed trading decisions."

Bank of New York Mellon Corp. stock was down 4 percent Wednesday. The bank also announced quarterly revenue and net income that missed Wall Street expectations.