New Attorney General takes the lead in New York
The new attorney general in New York, Eric Schneiderman, is taking an aggressive lead in the inquiries by state officials concerning banks overcharging state and local pension funds for foreign-exchange currency transactions over the past decade. Schneiderman is investigating Bank of New York Mellon Corp.’s (“BNY Mellon”) charging of New York pension funds for thousands of transactions. Similar investigations against BNY Mellon as well as State Street Corp. of Boston (“State Street”) are underway in Virginia, Florida, Massachusetts, North Carolina, Ohio, Oklahoma, and California. The Securities and Exchange Commission and the Department of Justice are also investigating the matter.
The investigations were sparked by a whistleblower group that includes Harry Markopolos, a financial fraud investigator who warned the SEC for years of the now infamous Bernie Madoff Ponzi scheme. In 2009, California announced a lawsuit against State Street, and this year, Virginia and Florida took over investigations in qui tam lawsuits filed in those states. The 1921 Martin Law would permit Schneiderman to sue on behalf of funds in other states. Additionally, the Martin Law allows him to pursue securities fraud without proving the intent to defraud. BNY Mellon met with prosecutors in Virginia at a mediation meeting on August 2, presumably to discuss the possibility of a settlement. The results of those discussions are not expected to be known until at least August 11.
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