The State Street Corporation is preparing to settle with the Securities and Exchange Commission and The U.S. Department of Labor for over $500 million regarding allegations that it unlawfully overcharged clients on foreign currency transactions. This, according to the Wall Street Journal and also based on the fact that in June 2015, the bank disclosed that it set aside $585 million to cover all of the claims.
Last year, the Bank of New York Mellon paid $714 million to end a case with identical allegations.
The core of the case alleged that the banks “standing instruction” foreign exchange programs where customers who need frequent currency transactions don’t negotiate each trade but the price is set by the bank to set the price for the transaction. The mess was revealed in 2009 when California joined a whistleblower case in which State Street was accused of defrauding California pension funds through overcharging on currency trades. That case settled after a negotiation on those costs.
Jeffrey Newman represents whistleblowers.
