As per a
report, after the pension funds related charges,
Bank of New York Mellon Corp.
) is now being pressured by Fidelity Investments - one of the
largest mutual funds and financial services groups - to maintain
stringent pricing standards on foreign currency trades. As
mentioned in a number of lawsuits filed against BNY Mellon,
Fidelity has also been overcharged by the bank in pricing on
certain foreign exchange (FX) trades having standard order.
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BNY Mellon is not the only bank to have been accused by the
states for overcharging the pension funds in relation to FX
trades. Back in 2009, the state of California had charged
State Street Corp.
) for improper pricing of foreign exchange for California pension
The banks had resorted to such fraudulent moves driven by the
downtrend in foreign-exchange business due to volatile markets.
In the third quarter of 2012, BNY Mellon recorded total revenue
of $121 million for foreign-exchange trading, plummeting 45% on a
Therefore, BNY Mellon, leveraging on clients like Fidelity,
overcharged them for extra revenue and subsequently entangled
itself in a number of lawsuits filed by the U.S. Department of
Justice (DOJ) and others. In the U.S. District Court in the
Southern District of New York, BNY Mellon is fighting a civil
fraud case of more than $1 billion, pursuing by the Justice
Department. The bank squabbles in court filings arguing its
trade-pricing policies were allowable and did not violate any
Though Fidelity has not filed any lawsuit against BNY Mellon, DOJ
filings show that the mutual fund firm has faced losses worth
over $50 million on standing instruction trades with BNY Mellon
from 2007 to 2010.
BNY Mellon's representative argued that the bank's
foreign-exchange products continued to grow attributable to
client demand and market conditions, while refraining from any
comments on Fidelity.
Owing to such issues, customers have grown wary and are dem