The deal, announced in court papers filed Dec. 14, would end a novel lawsuit attempting to hold the bank liable under the Employee Retirement Income Security Act for allegedly overcharging retirement plans that invest in foreign securities. Investors accused BNY of purposefully giving them unfavorable exchange rates when buying foreign securities with their retirement plan assets, which allegedly allowed the bank to take an undisclosed cut from these transactions.
A federal judge declined to dismiss the case in 2017, saying the dividends and other amounts received by BNY in connection with these foreign currency transactions are ERISA plan assets that could cause the bank to become a fiduciary under the statute. Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York called this a “question of first impression.”
The settlement class includes trustees and fiduciaries of thousands of retirement plans covering “many thousands” of individual investors, the parties said. It comes nearly four years after BNY agreed to pay $84 million to settle claims involving foreign currency transactions brought by the Labor Department and the New York Attorney General.
The deal allows class counsel to seek attorneys’ fees of nearly $4.2 million. The proposed class is represented by Ciresi Conlin LLP, McTigue Law LLP, Beins Axelrod PC, Alston & Bird LLP, Keller Rohrback LLP, Slevin & Hart, and Sidney H. Kalban.
BNY is represented by Paul Weiss Rifkind Wharton & Garrison LLP.
The case is Carver v. Bank of N.Y. Mellon, S.D.N.Y., No. 1:15-cv-10180-JPO-JLC, motion for preliminary settlement approval 12/14/18.