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.

New York City, New York based Bank of New York Mellon Corporation is a financial services and banking firm.
The company is the result of the 2007 merger of The Bank of New York and Mellon Financial Corporation. The company's principal business is investment banking, private equity and global wealth management and corporate banking. BNY Mellon as the company is also known, has $1.6 trillion in assets under management and has total assets of $385.3 billion. The company employs more than 50,000 people and is the oldest banking corporation in the United States, dating back to the Bank of New York's founding by Alexander Hamilton in 1784.

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.

BNY Mellon Automates Loan Documentation Process for Investment Managers

Company introduces automated system for submitting loan trade documents to the bank.

Other Stocks in the News

Amazon gets FAA approval to use drones

Company gets an experimental airworthiness certificate to use drones.

Standard General's bid is RadioShack's sole hope of survival: WSJ

According to the Journal, the $145.5 million bid is Radio Shack's last hope to avoid liquidation.

Published on Mar 20, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

Posted in ...