Florida sues Bank of New York Mellon over pension
Aug 12, 2011
The following article was published in the Tampa Tribune on August 11, 2011:
Florida sues bank of New York Mellon over pension
By Gary Fineout
Florida filed a lawsuit on Thursday that accused the Bank of New York Mellon of overcharging the state pension fund by millions of dollars.
The lawsuit was filed by Attorney General Pam Bondi in a state court in Tallahassee. A similar lawsuit was filed Thursday against the New York bank by Virginia’s attorney general.
Bank of New York Mellon serves as the main custodian of Florida’s massive retirement fund, currently valued at nearly $120 billion.
The lawsuit contends that bank overcharged the state for foreign currency exchanges by trading them in such a way that the state either paid too much or got paid too little. The lawsuit does not give an exact amount of how much the state was overcharged. Instead the state says the transactions cost Florida “millions.”
“Every penny that state and local employees entrust to Florida’s pension fund is hard-earned, and we will not allow Floridians money to be lost due to fraudulent activity,” Bondi said. “Overcharging for foreign exchange transactions is essentially stealing, and any company that does do will be held accountable.”
Jeep Bryant, a spokesman for the New York bank, called the lawsuit “unwarranted” and said that it “reflects a flawed understanding of foreign currency markets.”
“We will fight these claims in court and are confident we will prevail,” Bryant said. “We value our client relationships and are always prepared to respond to client questions about the pricing of our services. While our first choice is always an amicable resolution, we refuse to be coerced into paying for and admitting wrongdoing where none exists.”
Florida’s pension fund has nearly 1 million current and retired public employees enrolled in it. Bank of New York Mellon was selected in 2005 to serve as the main custodian.
The lawsuit filed on Thursday builds on the filing of a previous whistleblower complaint against the bank.
Ash Williams, the executive director of the State Board of Administration, said that the legal action would not interfere with the ability of the pension fund to meet its obligations to retirees.