New York City and the State Attorney General Eric Schneiderman have sued Bank of New York Mellon for fraud.
They claim the bank illegally acquired some $2 billion from the city's police, fire and teacher pension funds by misrepresenting foreign currency transaction rates over the course of a decade.
"Banks are expected to provide a reliable and honest service to their customers. Unfortunately, this does not seem to be the case as it relates to the Bank of New York Mellon and their foreign exchange services provided to the New York City Pension Funds," Deputy Comptroller for Legal Affairs/General Counsel Ricard Morales said. "We remain confident that New York City's pensioners and taxpayers will recoup what they are rightfully owed."
In a statement, Bank of New York Mellon accused the Attorney General of prosecutorial overreaching, and said it will defend itself against a lawsuit that ignores the facts and the law.
"We are extremely disappointed that the Attorney General has opted to bring a lawsuit based on a fundamental misunderstanding of the role of custodian banks and the operation of the global foreign currency market," the bank said in its statement.
The lawsuit was filed Tuesday in State Supreme Court.
Disclosure: Schneiderman’s father, Irwin Schneiderman, is a member of the WNYC Board of Trustees and has been a long-time donor to the station.