The $1.3bn (€1bn) Louisiana Municipal Police Employees’ Retirement System (LAMPERS) has launched a class action lawsuit against banking giant Bank of New York Mellon.
The suit alleges the custody specialist misled investors about its financial condition relating to claims it overcharged clients for foreign exchange transactions.
The case is in addition to various actions by investors who claim they lost out directly from the trades. BNY Mellon has refuted the claims.
The LAMPERS complaint alleges that the bank and senior executives issued “false and misleading” press releases, financial statements, regulatory filings and conference call statements.
The Baton Rouge-based fund says the company reported inflated revenue and concealed the risks of overcharging custodial clients for foreign currency trades.The case is being brought on LAMPERS’ behalf by law
firm Bernstein Litowitz Berger & Grossmann (BLB&G).
The complaint says suits by various states’ Attorneys General, as well as a series of news articles on the matter, “caused the price of BNY Mellon stock to drop precipitously” – by 37% between January and August.
In the meantime, both the New York Attorney General and the Department of Justice have also filed actions against BNY Mellon.
Just this week BNY Mellon urged asked a court to dismiss the New York Attorney General’s lawsuit.
BNY Mellon, which has $25.9trn in client assets under custody, has called the states’ claims “flat out wrong”. They reflected a “fundamental misunderstanding” about custody banks and institutional FX markets.
“We will defend ourselves vigorously on behalf of our shareholders, including many pension funds,” BNY Mellon said in a statement in October.