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Another Fund Sues BNY Mellon

If Bank of New York Mellon and State Street thought they had seen the last US state pension fund emerge to sue them over foreign exchange execution levels, they were proved wrong last week when a Pennsylvania fund launched a class action on the issue.

The South-Eastern Pennsylvania Transportation Authority (Septa) is claiming that BNY Mellon charged “false” rates for foreign exchange transactions in a similar claim to other whistleblower-led complaints brought against the bank and State Street by the states of Arkansas, California, Florida and Virginia. The proposed class action seeks to recover more than $5 million and represents all impacted BNY Mellon clients, except those in the whistleblower lawsuits, according to a report on Reuters.

In telling Reuters that the bank will fight the suit’s “false allegations”, a BNY Mellon spokesperson said that the bank provides a rate range to its clients daily and offers them an opt-out to execute their FX transactions through a different provider. For their part, Septa says it only became aware of the practice when the other states brought their actions against the two banks.

The latest action represents something of an embarrassment for the bank as Mellon, which merged with the Bank of New York in 2007, was headquartered in Pennsylvania and still has close connections to the state.

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