State Street, the major forex bank hit with multiple lawsuits over claims of unfair forex pricing, has settled with one of its suitors. State Street is only one of a several major banks, including BNY Mellon, who are being sued by large investment firms and pension funds for claims of forex prices manipulation.
SAN FRANCISCO/BOSTON – The only U.S. state pension fund known to have settled with State Street Corp over recent foreign exchange trading issues received its “full demand” from the bank, records show, terms that could lay the groundwork for deals elsewhere.
The Washington State Investment Board reached an $11.7 million agreement with the custodial bank last October, without filing a lawsuit. Other states such as California, Virginia and Florida are taking legal action against custodial banks on behalf of their retirement funds.
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State Street and Bank of New York Mellon face whistleblower allegations that they charged unfairly high prices for currency trading transactions, inflating their own profits. They reject accusations of wrongdoing. The lawsuits accuse the banks of charging higher prices than the trades actually were executed at — often the highest price of the day. The banks allegedly deceived the pension funds by giving false reports of the real price. In the Washington dispute, state officials asserted State Street made trades “inconsistent with the contracts” it had to manage public money, according to a settlement document.
The $11.7 million obtained by the WSIB represents the “full demand” that officials representing the pension fund made to the bank, according to minutes from a WSIB subcommittee meeting last November. On Thursday, WSIB executive director Theresa Whitmarsh confirmed that the board received 100 cents on the dollar for its forex claims. The fund also paid no attorneys fees, a state lawyer said at the November meeting.
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