Bank of New York Mellon faces an amended complaint filed by federal government claiming the firm defrauded clients of more than $1.5 billion through foreign-exchange trades.
The bank “repeatedly lied” about a service for foreign currency transactions and defrauded clients, including pension funds and federally insured financial institutions, of more than $1.5 billion, the U.S. Attorney’s Office in New York said in an amended complaint filed Thursday night.
“Standing instruction was so much more profitable to BNYM than any other foreign exchange service because it relied on a fraudulent business model,” Preet Bharara, the U.S. Attorney in Manhattan, said in the filing.
The government’s lawsuit is one of several brought against the bank, including one by New York Attorney General Eric Schneiderman, alleging it defrauded clients through its so-called standing instruction foreign-exchange service. BNY Mellon is also the subject of lawsuits filed by attorneys general of Virginia and Florida as well as an investigation by the Securities and Exchange Commission.
In the first complaint filed in October, the U.S. Attorney’s Office said the bank defrauded clients of “hundreds of millions of dollars.” Part of the lawsuit was resolved under an agreement approved last month.
“As we have said before regarding this lawsuit, we believe it is without merit, and we will defend ourselves in court,” said Kevin Heine, a BNY Mellon spokesman.