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BNY Mellon settles FX cases for $714M

BNY Mellon
Adam Jeffery | CNBC

Bank Of New York Mellon reached several settlements over fraudulent foreign exchange practices, agreeing to pay $714 million to resolve the cases.

The offices of New York Attorney General Eric Schneiderman and U.S. Attorney for the Southern District of New York Preet Bharara announced Thursday that the bank had agreed to settle with the U.S. Department of Justice, the New York Attorney General, the U.S. Department of Labor, the U.S. Securities and Exchange Commission and private class actions.

BNY Mellon admitted that it had promised to give customers best interbank market price of the day on foreign exchange transactions, but instead gave them the worst price, according to a release from Schneiderman's office.

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Bank of NY Mellon "admitted the factual details of its fraud" and said it would end the employment of executives involved in the fraud, and it would reform its practices "to improve and increase the information it provides to its customers," the release said.

"We are pleased to put these legacy FX matters behind us, which is in the best interest of our company and our constituents. We continue to improve our product offerings to ensure they are meeting client demand and positioning clients to succeed in an increasingly complex financial environment," BNY Mellon said in a Thursday afternoon release.

Among the settlements, the bank said the DOJ and New York Attorney General's office would each receive $167.5 million, and it had agreed to pay $335 million to settle the customer class action litigation.

"Investors count on financial institutions to tell them the truth about how their investments are being managed. But Bank of New York Mellon misled customers and traded at their expense," Schneiderman said in his office's release. "Today's settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and face serious consequences for their wrongdoing."

Correction: This article has been updated to reflect Bank of NY Mellon's admission of "the factual details of its fraud," according to the release.