Bank of New York Mellon Corp. doesn’t have to face Virginia’s lawsuit claiming the world’s largest custody bank defrauded state pension funds through foreign-currency transactions, a state judge ruled.
Fairfax County Circuit Judge Terrence Ney dismissed the complaint, saying the state couldn’t proceed under the Virginia Fraud Against Taxpayers Act. A copy of the ruling was provided by the bank and couldn’t be immediately confirmed with the court yesterday after regular business hours.
“We are pleased that the Virginia court dismissed the entire case against us, vindicating our position that the claims were without merit,” Kevin Heine, a spokesman for the New York-based bank, said in a statement.
BNY Mellon has been sued by several states and the U.S. Attorney in Manhattan over pricing of foreign-currency trades on behalf of clients. Virginia Attorney General Ken Cuccinelli sued the bank last year, claiming the bank profited from transactions at the expense of pension funds.
Brian Gottstein, a spokesman for Cuccinelli, said the office was reviewing the decision and “determining what our next action will be.”
“It is important to remember that the court’s ruling does not absolve the bank of wrongdoing,” Gottstein said in a statement.
The Virginia Fraud Against Taxpayers Act requires the submission of a claim for payment, which didn’t occur, the judge said. Accounting statements submitted by the bank to the state don’t request or demand money and instead are records or statements of past transactions, according the ruling.
There may be other potential causes of action against the bank, and any redress sought on behalf of the pension funds will have to come by “an avenue other than” the act, the judge said.
“The court cannot rewrite the VFATA in order to have it comport with what the court believed the act may be trying to address,” Ney said.
The case is Commonwealth of Virginia v. Bank of New York Mellon Corp., 09-15377, Circuit Court for the County of Fairfax, Virginia (Fairfax).