It only took BNY Mellon eight months since the excessive forex overcharging story exploded back in March 2011 to start offering decent forex pricing to its clients.
Based on the class action suit filed by Southeastern Pennsylvania Transportation Authority (SEPTA), BNY Mellon has manipulated FX transactions executed by the Company in order to maximize profits to BNY Mellon at the expense of the Company’s clients, such as SEPTA. In essence, BNY Mellon charged its clients inflated FX rates when buying foreign currency, and deflated FX rates when selling foreign currency. The rate BNY Mellon actually charged clients is set after a FX transaction is executed and after the Company had an opportunity to observe post-execution changes in the FX currency market. The difference between the actual FX transaction price and the amount ultimately charged to BNY Mellon’s clients is pocketed by the Company as profit.
You can also read some of BNY Mellon internal emails relating to the overcharging scandal as published here. The read is no less than hilarious.
The Participants in Forex Trading and their Role in the MarketGo to article >>
Bank of New York Mellon Corp. (BK), accused by state and federal officials of defrauding public pension funds on foreign-exchange trades, is offering some of those customers a new pricing model.
The bank has proposed applying fixed margins over benchmark currency rates when automatically executing currency trades for custody clients, said Mary Jane Wardlow, a spokeswoman for the Employees Retirement System of Texas. The bank would price the trades at specific times, rather than pick a rate that’s favorable for the bank at the end of the day.
BNY Mellon, the world’s largest custody bank, was sued last month by New York Attorney General Eric T. Schneiderman and the U.S. Attorney’s Office in Manhattan, who said it overcharged New York City public pension funds by more than $2 billion on foreign-exchange transactions. BNY Mellon, which has denied the accusations, is in early stage talks with federal prosecutors to settle, according to a person briefed on the discussions.