Fraud in the News

Fraudulent forex fixing

On March 19, federal and state authorities announced that the Bank of New York Mellon (BNY) will pay $714 million to settle accusations that it cheated government pension funds and other investors for more than a decade. According to The New York Times article, Bank of New York Mellon Will Settle Currency Trade Case for $714 Million, by Ben Protess on March 19, the settlement resolves lawsuits filed in 2011 by Preet Bharara, the U.S. attorney in Manhattan, and Eric T. Schneiderman, the New York attorney general.

According to the article, the authorities accused BNY of assuring clients that they would receive the best possible rate when executing a foreign exchange market currency (forex) trade. However, the BNY did the opposite — it provided clients "prices that were at or near the worst interbank rates," which enabled the bank to make extra cash during the 2008 financial crisis.

In a statement by Bharara included in the Times article, he said that clients "trusted the bank to be honest about the financial services it was providing and to deal with them fairly." But instead, he said, the bank "and its executives, motivated by outsized profits and bonuses, breached this trust."