Bank of New York Mellon (BK) Settles Currency Lawsuits for $714M
Shares of Bank of New York Mellon Corporation (BK) were trading up +0.40 or +0.99 percent to $40.70 per share in this morning's premarket. The company settled a number of lawsuits late yesterday and agreed to pay a total of $714 million to several parties. Bank of New York Mellon stock closed at $40.30, down -0.53 or -1.30 percent in Thursday's regular trading session.
The lawsuits, filed by United States attorney in Manhattan, Preet Bharara and the New York attorney general, Eric T. Shneiderman in 2011, accused the company of giving clients "prices that were at or near the worst interbank rates while assuring them that they would be given the best possible exchange rates on their foreign exchange transactions. According to the lawsuits, the bank perpetrated the fraud from 2000 to 2011 and received upwards of $2 billion in profits from the deceptive practice.
In a statement issued by BNY Mellon, the company stated that, "We are pleased to put these legacy FX matters behind us, which is in the best interest of our company and our constituents. We continue to improve our product offerings to ensure they are meeting client demand and positioning clients to succeed in an increasingly complex financial environment .
The total payment of $714 million - which was fully covered by the company's preexisting legal reserves -will be divided among several litigating parties, including the Department of Justice and the New York Attorney General, which will each receive $167.5 million; the Department of Labor will receive $14 million with $30 million settled in principle with the Securities and Exchange Commission. The company also agreed to pay $335 million for settlement of the customer class action lawsuit.
Some of the victims of the bank's ongoing fraud included the Ohio Police and Fire Pension Fund, the Ohio School Employees Retirement System, New York pension funds and many private investors. Prominent private investment funds were also victims of the bank's deceptive practices. Preet Bharara noted in a statement that the bank's customers "trusted the bank to be honest about the financial services it was providing and to deal with them fairly.
BNY Mellon stock is reacting positively to the news in this morning's premarket. The stock is trading a point off of its yearly high and could test the level later this morning. The settlement of the litigation is good news for stockholders, ending years in court for the plaintiffs.
Other News About BK
Tony DePasquale joins BNY Mellon Wealth Management as senior director
Tony DePasquale will be the senior director for business development at the company's Nevada office.
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Company introduces automated system for submitting loan trade documents to the bank.
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