Virginia attorney general sues bank to the tune of $900 million
August 15, 2011
Richmond, VA: On August 11, 2011, Attorney General Ken Cuccinelli sued Bank of New York Mellon, seeking $900 million in damages and penalties. The suit alleges the bank defrauded the Virginia Retirement System, responsible for managing both state and local pension funds, 73,000 times.
According to Cuccinelli's suit, filed under the Virginia Fraud Against Taxpayers Act of 2002, the bank's currency traders falsely reported the exchange rate for transactions conducted on behalf of six pension funds and kept the profits. Bank spokesman Kevin Heine said the lawsuit is "unwarranted and reflects a flawed understanding of foreign currency markets," and noted the bank plans to fight the claims in court.
Bank of New York Mellon is paid $4.5 million each year to protect and manage Virginia's pensions, which total $55.1 million in state and local government retirement funds. The state is seeking $120 million (plus interest) in damages and $811 million in civil penalties. Cuccinelli has alleged $40 million in fraud.