An informant in a state fraud case against Bank of New York Mellon Corp. has
provided prosecutors a rare inside peek into how the bank allegedly scrambled to contain the fallout from a fast-growing government investigation, according to hundreds of pages of confidential documents.
Documents Relating to State Fraud Case Against Bank of New York Mellon Corp.
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As investigators sought to determine whether the bank overcharged clients to execute their currency trades, a senior BNY Mellon executive nicknamed “Rambo” urged traders not to tell clients how much money they made on trading, according to the informant. Bank officials worried clients would switch to negotiating their own foreign-exchange trades, where the bank’s profit margin was far lower, an internal bank memo states.
The bank also altered its website, changing the wording of its trading practices. And when a veteran bank official heard about the government investigation, she said: “It’s over, it’s all over,” according to the informant.
The documents, which include company materials, emails and observations, were submitted to Florida prosecutors by lawyers for whistleblower Grant Wilson and obtained by The Wall Street Journal in an open-records request.
Mr. Wilson operated as a government informant for two years while working as a currency trader at BNY Mellon, giving him an extraordinary view of what was happening inside the bank as the investigation unfolded. The extensive documentation, including his descriptions of how the bank processed trades that allegedly resulted in client overcharges, could increase pressure on BNY Mellon as it battles a widening law-enforcement probe.
Five states, including Florida, and the Manhattan U.S. attorney have filed civil lawsuits over the past several months against BNY Mellon, seeking a total of more than $2 billion in damages. The suits allege the bank defrauded pension funds and other clients by systematically overcharging them on currency transactions.