A Virginia Circuit Court has dismissed a lawsuit claiming that BNY Mellon defrauded state pension funds in foreign exchange transactions.
Virginia Attorney General Ken Cuccinelli sued the bank in August last year, claiming it profited from these transactions.
In dismissing the complaint yesterday, Fairfax County Circuit Judge Terence Ney found the basis of the complaint went against the against Virginia Fraud Against Taxpayers Act (VFATA) which requires a submission of a claim for payment. This did not occur, said the ruling. The ruling said: The Commonwealth has even conceded that [u]pon execution of a standing-instruction trade, BNYM could not present a claim for payment. Instead, BNYM debited the Virginia Funds accounts, presenting to the Commonwealth records and statement of those treads only after BNYM completed them. Although the accounting statements could amount to a false record or statement, they are still distinct form a false or fraudulent claim.
In a statement, BNY Mellon spokesman Kevin Heine said: We are pleased that the Virginia Court dismissed the entire case against us, vindicating our position that the claims were without merit.
Cuccinellis Communications Director Brian Gottstein said: While we are still reviewing the court’s order 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. In fact, for the purposes of its analysis, the court assumes fraudulent behavior by the bank, but finds that the Virginia statutes are written in such a way as to prevent that fraud from being punished under the Fraud Against Taxpayers Act.
The case is Commonwealth of Virginia v. Bank of New York Mellon Corp. (BK), 09-15377, Circuit Court for the County of Fairfax, Virginia (Fairfax).
A United States District Court judge in California at the beginning of the month dismissed several of the claims made against BNY Mellon in the lawsuit filed against the custodian by whistleblower FX Analytics and ten public pensions in the state. The plaintiffs claim BNY Mellon overcharged them on foreign exchange transactions, among other complaints.
Five pending federal court lawsuits against BNY Mellon regarding its pricing of standing instruction FX transactions have been moved from California and Pennsylvania to join three similar existing lawsuits in a consolidated case in the Southern District of New York. A district court judicial panel accepted BNY Mellons request to centralize the eight lawsuits in New York, saying that doing so will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.
The custodian also faces lawsuits by state officials in Massachusetts, Ohio and Florida.
(JDC)