Whistleblowers to collect over $100 million in State Street and BNY Mellon foreign trading scheme settlements

 

The whistleblowers who aided the U.S. government in uncovering wrongful activities  of State Street Corp and Bank of New York, regarding foreign exchange  currency trading, stand to collect in excess of $100 million in rewards. Last month, State Street agreed to pay $530 million to settle civil claims it misled mutual funds and other custody clients with hidden markups to foreign-currency trades. A big chunk of the payout will go to government agencies, including the Securities and Exchange Commission and Justice Department.Previously there was a $714 million civil settlement BNY Mellon reached last year to resolve accusations it cheated government pension funds and other investors on currency trades for more than a decade. Late last month, the SEC filed a notice opening the 90-day window for whistleblower claims on the BNY Mellon agreement.

Famed forensic accountant  Mr. Markopolos,  gathered the group of 3 whistleblowers, former bank employees Grant Wilson, Peter Cera and Ryan Gagne and advised them. Mr. Markopolos asked a friend who had worked with State Street who said custody banks typically charge pension funds unfavorable foreign-exchange, or FX, prices. “No one ever checks FX,” the friend said.Markopolos and his team spent years digging up evidence of the currency schemes.

 

 

Both banks admitted to wrongdoing in the settlements. Custody banks provide accounting services and administrative functions for other banks, corporations and money managers.

The SEC’s program allows whistleblowers to collect between 10% and 30% of penalties the government collects. It has granted a handful of awards, but the agency provides few details on payouts.

 

Jeffrey Newman represents whistleblowers but not Mr. Markopolos or others in this case