BNY Mellon in $714 million FX settlement
The Bank of New York Mellon has been hit by a $714 million (€660 million) settlement on accusations of FX manipulation, which resulted in it defrauding government pension funds and investors for more than a decade.
The settlement is part of a broader deal which will see the bank laying off some employees and reworking its foreign exchange operations.
The settlement was struck by the US Attorney in Manhattan and the New York Attorney General and focuses on what the authorities called a ‘fraudulent business model’. The bank claimed to offer clients the best foreign exchange rates ‘free of charge’ but instead offered them lower rates and imposed ‘undisclosed fees’. BNY Mellon secured the gains from better exchange rates rather than passing the gains onto its customers.
“Bank of New York Mellon have admitted to essentially lying outright to their clients to line their own pockets. The most concerning factor is that BNY Mellon’s misconduct was outed by a whistle-blower, which begs the question, how many cases such as this happen where there is no one to lift the lid?” said Philippe Gelis, CEO and Co-Founder of Kantox, a business foreign currency exchange.
“Claims of offering the best FX market rate are ubiquitous in the sector, and so, the only way to ensure they do indeed get the best market rate, companies must benchmark their bank against the live mid-market rate. This is not just another foreign bank being fined in a foreign country by a foreign court, but a warning of malpractice that could be carried out by any bank or broker that does not display live rates transparently."
