|Bank of New York Mellon FOREX Litigation
International Union of Operating Engineers, Stationary Engineers Local 39 Pension Trust Fund (“IUOE Local 39”) v. The Bank of New York Mellon Corporation, (N.D. Cal. 2011)
Hach Rose Schirripa & Cheverie, along with co-counsel, represents a proposed nationwide class of Taft-Hartley and employee benefit plans covered by ERISA, other non-public institutional investors, including private pension funds, mutual funds, endowment funds, and investment manager funds in an class action against The Bank of New York Mellon Corporation (“BNY Mellon”) and its predecessors and subsidiaries, alleging that defendants charged class members fictitious foreign currency exchange ("FX") rates in connection with the purchase and sale of foreign securities.
The complaint charges that defendants engaged in scheme through a series of deceptive acts dating back at least ten years. Upon receiving a request from plaintiff or similarly situated class members for a purchase or sale of a foreign security pursuant to standing instructions, defendants would execute a trade at the FX rate available close to the time of receiving the request, having represented to the plaintiff and class that BNY Mellon used “best execution” standards. BNYM Mellon would then watch the market fluctuation on FX rates related to the transaction over the course of the day and charge plaintiff a rate less favorable to plaintiff than the one at which defendants actually traded. Defendants allegedly kept for themselves, as an unlawful profit, the difference between the false and actual price for each FX transaction.
Plaintiff seeks relief under California law for a class of California-based ERISA funds, and under New York law for those ERISA funds for whom FX trades were conducted through BNY Mellon’s New York FX trading desk.
NEWS: Federal Judge Sustains Local 39’s Allegations of BNY Mellon’s
Deceptive FX Practices
February 14, 2012
U.S. District Court Judge William Alsup denied in total the motion by The Bank of New York Mellon Corporation and other defendants (collectively, “BNY Mellon”) to dismiss a nationwide class complaint brought by the International Union of Operating Engineers, Stationary Engineers Local 39 Pension Trust Fund (“IUOE Local 39”) on behalf of non-public institutional investors, such as private pension funds, mutual funds, and ERISA funds, for whom BNY Mellon conducted foreign currency exchange (“FX”) transactions.
The complaint charges that defendants defrauded these investors by inflating the costs of FX transactions that were executed according to “standing instructions.” Judge Alsup held that the complaint adequately pleads that BNY Mellon issued monthly reports that listed fictitious FX rates it claimed to have paid, and kept for itself the difference between the falsely reported price and the actual price for each FX transaction.
The complaint asserts California state law claims for unfair competition, false advertising, breach of contract, and breach of the implied covenant of good faith and fair dealing, as well as violations of New York state business law. Judge Alsup denied defendants’ motion to dismiss with respect to each of plaintiff's claims.
Click here to read the Court's order.