BNY Mellon settles with Florida for $28 million
05 November 2013 Florida
Image: Shutterstock
BNY Mellon will pay $28 million to the State of Florida to settle allegations of overcharging for foreign currency transactions and cash reinvestment losses.
The bank admitted no wrongdoing in agreeing the 31 October settlement, but Florida attorney general Pam Bondi called it a 鈥渟ubstantial recovery on behalf of [the state鈥檚] retirement fund鈥�.
The settlement provides full compensation for the state鈥檚 past foreign currency trades and ensures complete transparency on the pricing of future trades, according to the attorney general.
It also compensates the Florida Retirement System Trust Fund for investments made through BNY Mellon鈥檚 securities lending programme, on behalf of the state, in medium-terms notes issued by Sigma Finance, which defaulted on certain notes in September 2008 before going into receivership.
鈥淲e worked hard to achieve this substantial recovery on behalf of Florida鈥檚 retirement fund,鈥� said Bondi in a statement.
BNY Mellon became the Florida Retirement System Trust Fund鈥檚 custodian in July 2005, signing a securities lending agreement at the same time.
A whistleblower originally brought the case against BNY Mellon, but the State of Florida joined in 2011.
A BNY Mellon spokesperson said: "We are gratified that the Florida attorney general is withdrawing her lawsuit and that we have resolved issues related to the State Board of Administration鈥檚 securities lending programme. We鈥檙e also pleased to reach an agreement with the State Board of Administration that allows us to continue our longstanding relationship."
"We have always viewed these issues as commercial matters and have taken a pragmatic approach to resolving them directly with our clients."
Sigma Finance鈥檚 legacy has already cost BNY Mellon millions of dollars.
In its Q2 2012 results, the bank said it had put aside up to $280 million to settle in part a complaint from workers鈥� compensation insurance company CompSource Oklahoma.
It filed the complaint over losses connected with the investment of securities lending collateral in Sigma Finance.
The bank admitted no wrongdoing in agreeing the 31 October settlement, but Florida attorney general Pam Bondi called it a 鈥渟ubstantial recovery on behalf of [the state鈥檚] retirement fund鈥�.
The settlement provides full compensation for the state鈥檚 past foreign currency trades and ensures complete transparency on the pricing of future trades, according to the attorney general.
It also compensates the Florida Retirement System Trust Fund for investments made through BNY Mellon鈥檚 securities lending programme, on behalf of the state, in medium-terms notes issued by Sigma Finance, which defaulted on certain notes in September 2008 before going into receivership.
鈥淲e worked hard to achieve this substantial recovery on behalf of Florida鈥檚 retirement fund,鈥� said Bondi in a statement.
BNY Mellon became the Florida Retirement System Trust Fund鈥檚 custodian in July 2005, signing a securities lending agreement at the same time.
A whistleblower originally brought the case against BNY Mellon, but the State of Florida joined in 2011.
A BNY Mellon spokesperson said: "We are gratified that the Florida attorney general is withdrawing her lawsuit and that we have resolved issues related to the State Board of Administration鈥檚 securities lending programme. We鈥檙e also pleased to reach an agreement with the State Board of Administration that allows us to continue our longstanding relationship."
"We have always viewed these issues as commercial matters and have taken a pragmatic approach to resolving them directly with our clients."
Sigma Finance鈥檚 legacy has already cost BNY Mellon millions of dollars.
In its Q2 2012 results, the bank said it had put aside up to $280 million to settle in part a complaint from workers鈥� compensation insurance company CompSource Oklahoma.
It filed the complaint over losses connected with the investment of securities lending collateral in Sigma Finance.
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