State of Oregon seeks to co-lead class action against Bank of New York

Posted on: February 23rd, 2012 by Steve Larson

The State of Oregon is seeking to co-lead a securities class action lawsuit against the Bank of New York Mellon Corp. over alleged currency exchange manipulation.  The suit seeks to recover at least $15.7 million that the Oregon Common School Fund and Oregon Public Employees Retirement Fund lost as a result of the alleged scheme.

According to the press release from Oregon Treasurer Ted Wheeler and Attorney General John Kroger, the losses were triggered by the manipulation of foreign currency exchange rates that came to light after whistleblowers accused BNY Mellon of rigging prices to obtain higher profits.  The lawsuit alleges that instead of buying and selling foreign currency at the “best execution standards,” as promised, BNY Mellon would charge clients the least favorable rates and pocket the difference in profits.

Oregon did not have any foreign currency transactions through BNY Mellon.  However, according to Wheeler and Kroger, the Common School Fund and Oregon Public Employee Retirement Fun were damaged because the fraudulent practices and subsequent outrage caused the value of Oregon’s holdings of BNY Mellon stock to plummet.

The Oregon State Treasury and Oregon Investment Council bought and sold shares in BNY Mellon between April 2008 and June 2011 on behalf of the funds.  In that span, the value of those shares declined by 41 percent.

The Public Employees Retirement Fund lost more than $14.5 million and the Oregon Common School Fund lost approximately $1.2 million.

Stoll Berne is one of the firms representing the State of Oregon in this case.