Bank of New York Mellon Corp. (BK:US) must face a Los Angeles pension fund’s lawsuit accusing the bank of overcharging for foreign exchange transactions, a judge ruled.
While U.S. District Judge William Alsup in San Francisco yesterday threw out allegations under the California False Claims Act, he refused the bank’s request to toss claims of breach of contract, breach of fiduciary duty, unfair business practices and fraud by concealment. He dismissed those same claims another Los Angeles pension fund and funds in San Diego and Stanislaus counties and said they could be refiled in courts in those locations.
The funds said in a complaint filed last year that New York-based BNY Mellon said it would use “best practices” when executing foreign exchange transactions to give its clients the highest price when in fact it used the least advantageous prices and secretly profited from the difference.
“We are pleased that this federal court has vindicated our position and dismissed the most serious claims against us,” Kevin Heine, a spokesman for BNY Mellon, said in an e-mailed statement. “By rejecting completely all claims made under the California False Claims Act, which mirrors the federal False Claims Act, the court has essentially reduced this dispute to a basic breach of contract case and removed any legal basis to seek significant financial penalties. We will vigorously defend the remaining claims against us.”
The case is In Re Bank of New York Mellon Corp. (BK:US) False Claims Act Foreign Exchange Litigation, 11-5683, U.S. District Court, Northern District of California (San Francisco).
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