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From Securities Regulation Daily, September 25, 2015

Bank of New York Mellon settles forex investor class action for $335 million

By Lene Powell, J.D.

The federal district court for the Southern District of New York approved a settlement plan between the Bank of New York Mellon (BNYM) and a group of investor plaintiffs relating to claims that BNYM rigged foreign exchange (forex) rates to the detriment of investors. The allocation plan provides for a payout of $335 million to the plaintiffs and $83.7 million in attorney fees. The settlement resolves private investor claims that were part of a broad resolution of charges earlier this year by multiple regulators and the DOJ (In re Bank of New York Mellon Corp. Forex Transactions Litigation, September 24, 2015, Kaplan, L.).

BNYM provides forex services to its custodial clients to allow clients to manage currency risk. Clients can either negotiate trades directly or use the “standing instructions” program, which gives BNYM discretion to execute trades on clients’ behalf. According to the plaintiffs, BNYM represented that custodial clients received the most competitive rates available. In fact, however, BNYM gave clients the worst rates of the day and pocketed the difference between that and the actual market price at which the clients’ trades were executed, the plaintiffs argued.

In March 2015, BNYM settled charges brought by the Department of Justice, the New York Attorney General, the Department of Labor, the SEC, as well as the private class action, for a total of $714 million. In addition to the fines, BNYM agreed to fire a managing director and reform its business practices by providing clients additional pricing information on the standing instruction services.

Settlement. In addition to the distribution and attorney’s fees, the settlement provided for reimbursement of out-of-pocket expenses of $2.9 million. According to a memorandum in support of the settlement, no class member objected to the settlement or fee request, and there were only two requests for exclusion, representing a tiny portion of the settlement fund.

The case is No. 12-MD-2335 (LAK) (JLC).

Attorneys: Brian Robbins (Robbins Arroyo LLP) for International Union of Operating Engineers, Stationary Engineers Local 39 Pension Trust Fund. Brian Murphy (Murray Murphy Moul + Basil LLP) for Ohio Police & Fire Pension Fund. Lynn Lincoln Sarko (Keller Rohrback L.L.P.) for Carl Carver and Landol D. Fletcher. Imtiaz A. Siddiqui (Cotchett, Pitre & McCarthy, LLP) for Bank of New York Mellon Corp. Arvind Khurana (Milberg LLP) for The Bank of New York Mellon Corp. and The Bank of New York Mellon Trust Co. National Association. Brendan Crimmins (Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.) for the Bank of New York Mellon and Bank of New York Mellon Trust Co., N.A.

Companies: International Union of Operating Engineers, Stationary Engineers Local 39 Pension Trust Fund; Ohio Police & Fire Pension Fund; Bank of New York Mellon Corp. False Claims Act Foreign Exchange Litigation; The Bank of New York Mellon Corp.; The Bank of New York Mellon; The Bank of New York Mellon Trust Co. N.A.; Bank of New York Mellon Trust Co., N.A.

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