Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Jacklyn Wille
Jan. 13 — For the second time in a month, Bank of New York Mellon has been sued by pension plan participants who claim the company's foreign exchange transactions skimmed millions off of their retirement savings.
The newest class action complaint, filed Jan. 12 by a participant in the Sheet Metal Workers' National Pension Fund, comes two weeks after similar claims were raised by participants in the Central States, Southeast and Southwest Areas Pension Fund, as well as participants in a defined benefit plan sponsored by Owens Corning and a 401(k) plan sponsored by Verizon (Carver v. Bank of N.Y. Mellon, S.D.N.Y., No. 1:15-cv-10180, complaint filed, 12/31/15; 03 PBD, 1/6/16).
Both suits take issue with the company's execution of foreign currency exchange transactions, which have been the subject of multimillion-dollar settlements with pension funds and government agencies over the past five years.
The instant lawsuit—like many recent suits against BNY Mellon—claims that the company set fictitious rates when converting foreign securities into U.S. dollars, allowing it to secretly profit off the spread between the fictitious rate and the actual rate.
While previous suits have dealt largely with BNY Mellon's “standing instruction” (SI) conversions, both of these most recent suits attack the company's transactions with respect to American depositary receipts (ADRs) held by retirement plans.
According to the instant complaint, BNY Mellon didn't reveal that its ADR transactions employed pricing practices similar to its SI transactions until 2015. Because of this alleged “fraud or concealment,” the complaint seeks to extend the class period back to January 1997, well beyond the Employee Retirement Income Security Act's six-year statute of limitation that typically applies to claims of fiduciary breach.
In detailing BNY Mellon's alleged missteps with regard to the foreign exchange transactions, the instant complaint quotes from the company's settlements in similar lawsuits, including its $714 million settlement with the Department of Justice and other entities.
A spokesman for BNY Mellon told Bloomberg BNA that the suit was without merit and the company would defend itself vigorously.
The complaint was filed by Keller Rohrback LLP in the U.S. District Court for the Southern District of New York.
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