(Photo above courtesy of CBN)
Oregon Treasurer Ted Wheeler and Attorney General Ellen Rosenblum announced that Bank of New York Mellon Corp. (BNY Mellon) has agreed to pay $180 million to settle a class action lawsuit seeking to recover losses Oregon and other investors suffered due to alleged foreign exchange fraud engineered by the New York-based financial institution.
Oregon sought to recover losses to the Oregon Public Employees Retirement Fund (OPERF) and Oregon Common School Fund (OCF) and losses sustained by all other BYN Mellon shareholders that occurred when BNY Mellon stock tumbled after news reports about its foreign currency exchange business.
“Fraud perpetrated by the companies we invest in harms Oregon taxpayers, schools, communities and retired public employees,” said Treasurer Wheeler. “Oregon’s prosecution of this case affirms that we will do everything in our power to recover losses suffered by investors.”
“Oregonians depend on their banks to make sure their investments are kept safe,” said Attorney General Rosenblum. “The money recovered from this lawsuit will help restore the health and longevity of Oregon’s retirement system, and limit future costs to state agencies.”
Oregon served as the sole lead plaintiff in the case, and the settlement funds will be distributed among thousands of shareholders including public pension plans, mutual funds and retirement plans including individual 401k and IRA plans. The losses were triggered by the bank’s foreign currency exchange practices, which came to light after whistleblowers alleged that BNY Mellon was rigging prices to obtain higher profits. Fallout from those revelations led to a 41 percent decrease in the value of BNY Mellon shares.
As a result of settlements entered into by BNY Mellon to resolve lawsuits about its foreign exchange practices, BNY Mellon has agreed to make changes to its website disclosures about its FX practices and terminated a key executive, among other items. The bank also agreed that contrary to its representations to its clients that it was offering “best rates” and “best execution,” the Bank gave standing instruction clients prices that “were at or near the worst interbank rates” of the day and that it “generally did not disclose its SI FX pricing methodology” to its clients or investment managers.
The settlement will be submitted for preliminary approval to a U.S. District Court Judge in New York within the next 30 days. If the settlement agreement is initially approved by the Judge, notice will be sent to the members of the class and the agreement will be submitted to the Judge for final approval later this year.
