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Compliance November 16, 2011
BNY Mellon Employees File Lawsuit over Foreign Currency Trading
Two former Bank of New York Mellon employees have filed a lawsuit on behalf of participants in BNY Mellon's 401(k) savings plan and Employee Stock Ownership Plan related to its foreign currency trading practices.
Reported by Rebecca Moore
The Pittsburgh Post-Gazette reports that the suit alleges BNY Mellon and plan administrators breached their fiduciary duties “causing the loss of millions of dollars of participants’ retirement savings.”
BNY Mellon has been hit with numerous lawsuits that allege the company overcharged and misled pension funds while executing currency trades for them, charges BNY Mellon has strongly denied.
As a result of those lawsuits, BNY Mellon’s shares plunged from $49.40 on January 3, 2008, to $20.92 on November 4, 2011, “a price which is significantly less than the price at which the plans and its participants were acquiring the stock,” the employee suit stated, according to the newspaper.
The complaint alleges BNY Mellon violated the Employee Retirement Income Security Act (ERISA) by “continuing to offer BNY common stock as a plan investment option and permitting the plans to buy and hold shares of BNY common stock when it was imprudent to do so,” and by failing to provide “accurate information to plan participants regarding the company’s standing instructions for [foreign exchange] transactions necessary to enable plan participants to make informed investment decisions.”
The suit seeks repayment for losses, plus damages, costs and attorney fees.
BNY Mellon spokesman Ron Gruendl declined comment to the Post-Gazette.
Plaintiffs' attorneys at Brodsky & Smith announced an investigation into Bank of New York Mellon’s investment of retirement plan participants’ and beneficiaries’ assets in company stock (see "Another Law Firm Starts BNY Mellon ERISA Investigation") after Attorney Generals for New York, Florida and Virginia filed suit accusing the company of overcharging state and other pension funds on foreign exchange fees and defrauding customers in the foreign exchange markets (see "BNY Mellon Sued by U.S. and NY").