The Bank of New York Mellon Corp. (Mellon) will pay $180 million to settle a putative class action brought by institutional investors accusing the company of running a deceptive foreign currency exchange program. The tentative settlement will resolve claims brought by the state of Oregon on behalf of several public pension funds and others alleging Mellon misled investors by making deceptive public statements about its foreign exchange program in violation of securities laws. “This settlement effectively resolves virtually all of the currently pending foreign exchange-related actions, with the exception of several lawsuits brought by individual customers,” the company said in the regulatory filing.
The settlement brings an end to the long-running multidistrict litigation (MDL) first brought in 2011, alleging that Mellon told customers it provided the “best execution” for foreign currency trades when in reality it bought the currencies at the lowest price of the day and sold it at the highest, pocketing the difference.
In March, Mellon paid $714 million to settle fraud claims by the SEC, the U.S. Department of Justice, the New York attorney general and others over the foreign exchange program. Mellon also admitted to certain facts and agreed to fire two executives implicated in the scheme. According to prosecutors, Mellon employees admitted to investigators that the bank neither sought the best rates for the exchange program’s customers nor provided the best execution. The investor class sought damages on behalf of investors who purchased Mellon stock between February 2008 and October 2011. The bank had argued last month it should be able to defend itself separately against each institutional investor’s claim.
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