(Bloomberg) -- Bank of New York Mellon Corp., the worlds largest custody bank, agreed to repay Massachusetts public pension funds $15.45 million to settle fraud claims brought by the states top securities regulator.
BNY Mellon will refund the amount over nine years by reducing custody fees charged to the states Pension Reserves Investment Management Board, William F. Galvin, secretary of the commonwealth, said today in a statement. The agreement resolves accusations that BNY Mellon defrauded the funds by overcharging for foreign-exchange services, Galvin said.
We are pleased to reach this commercial agreement with PRIM, which allows us to continue our longstanding relationship with them, Kevin Heine, a spokesman for New York-based BNY Mellon, said in a telephone interview.
BNY Mellon and rival State Street Corp. have been sued by a number of states for alleged overcharging on certain foreign- exchange transactions. BNY Mellon changed its pricing model in November 2011, a month after being sued by New York Attorney General Eric T. Schneiderman and the U.S. Attorneys Office in Manhattan. BNY Mellon made as much as $2 billion from fraudulent charges over 10 years from clients including New York City pension funds, according to those complaints. The banks have denied the accusations
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