Bank of New York Mellon Corp. (BK:US) must face a U.S. lawsuit that accuses the world’s largest custody bank of defrauding clients in foreign exchange transactions, a federal judge ruled.
U.S. District Judge Lewis Kaplan in Manhattan said the government could proceed with its claim that BNY Mellon misled clients by offering so-called best execution, or the best available market price at the time currency trades are executed, according to a decision filed today.
The government’s complaint contains allegations that “would permit the conclusion not only that bank employees knew their practices were inconsistent with an industry understanding of ‘best execution,’ but also took active steps to mislead their clients,” Kaplan wrote.
Manhattan U.S. Attorney Preet Bharara sued BNY Mellon in 2011, claiming that it misled clients of its foreign exchange services by concealing the way it was pricing trades. He claims the bank defrauded clients of more than $1.5 billion.
Kevin Heine, a spokesman for BNY Mellon, said in a statement, “We are pleased that the court dismissed a number of the claims advanced by the government. We look forward to addressing the remaining claims before the court.”
The case is U.S. v. Bank of New York Mellon, 11-6969, U.S. District Court, Southern District of New York (Manhattan).
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