Massachusetts Pension Reserves Investment Management Board, Boston, has been overcharged $30.5 million since 2000 on foreign-exchange transactions conducted by custody bank BNY Mellon, alleged state Treasurer Steven Grossman.
That’s more than the roughly $20 million Mr. Grossman alleged on June 13 that the $50 billion system had been overcharged. The earlier figure was from an initial review of the period since Jan. 1, 2007, by consulting firm FX Transparency, which also did the new analysis.
All of the alleged overcharges were related to “non-negotiated foreign-exchange transactions,” or standing order trades for handling the repatriation of interest income, dividend income or tax reclaims. Charges for the system’s negotiated trades — on the buying and selling of foreign securities by PRIM’s money managers — were a fraction of those non-negotiated fees.
At a June 13 news conference announcing that conclusion, Mr. Grossman said PRIM would ask FX Transparency to extend its review back to 2000, while conferring with Attorney General Martha Coakley on how to proceed in addressing the overcharge.
On Wednesday, Alethea Harney, a spokeswoman for Mr. Grossman, said talks with the attorney general have yet to reach any conclusions.
A statement e-mailed by BNY Mellon spokesman Kevin Heine said: “We reject the notion that (MassPRIM) was ‘overcharged.’ Negotiated FX rates and standing instruction rates — typically used for smaller transactions in more difficult to trade currencies — are different for good reason.
“The standing instruction rates charged to (MassPRIM) were disclosed daily. (MassPRIM) had the ability every morning before 11 a.m. to opt out of the guaranteed standing instruction price range being offered for that day, but did not do so,” according to the statement.
“We value our client relationships and are confident that we offer our clients and their investment managers competitive and attractive FX pricing,” according to the BNY Mellon statement.
On June 13, MassPRIM executives noted that the initial FX Transparency review found the bulk of the system’s non-negotiated foreign-exchange trades were conducted at the high end of the designated price range.