Bank of New York Mellon Corp., the world’s largest custody bank, defrauded clients of more than $1.5 billion through foreign-exchange trades, according to a new complaint by the U.S. government.
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 Manhattan said in an amended complaint. It was filed last night, according to the office.
“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.
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 Bank of New York spokesman.
The case is U.S. v. Bank of New York Mellon Corp., 11-6969, U.S. District Court, Southern District of New York (Manhattan).