BANK OF NEW YORK MELLON CORP

BNY Mellon agreed to pay $714 million in total to settle allegations by the U.S. Attorney for the Southern District of New York, the New York Attorney General, the SEC, and the U.S. Department of Labor that it defrauded clients in foreign-exchange transactions for as long as a decade. The fraud centered on BNY Mellon's "Standing Instructions" program for custodial FX transactions: the bank represented it would provide best execution, but instead assigned rates that systematically disadvantaged clients, pocketing the spread.

The SEC's portion included $30 million in civil penalties plus more than $120 million in disgorgement to defrauded customers. The SEC found that BNY Mellon provided its registered investment company clients with trade confirmations and monthly reports that were misleading — they did not specify when transactions were executed or how rates were assigned, in violation of Sections 31(a) and 34(b) of the Investment Company Act. The practice affected pension funds, endowments, and other institutional investors who relied on BNY Mellon as a trusted custodian. The DOJ described the conduct as "a massive scheme to overcharge customers."