Courageous Whistleblower Exposes Foreign Currency Manipulation at BNY Mellon
In the past few weeks, we have heard about the ongoing state and federal investigations into the foreign currency manipulation costs for pension funds by the Bank of New York Mellon. The investigations were brought about as a result of whistleblower Grant Wilson, who was a foreign exchange trader for BNY Mellon and was privy to information about these fraudulent pension costs. In response to these allegations and new lawsuits, BNY Mellon appears to be working towards a settlement with the US Attorney Preet Bharara and New York’s Attorney General Eric Schneiderman.
What BNY Mellon is accused of doing boils down to a charge of defrauding the public and investors. It is alleged that the bank overcharged state and local pension funds by providing unfavorable currency-exchange rates for over a decade. With the information provided by whistleblower Wilson, the states of Florida, Virginia, and New York filed lawsuits alleging that the bank told the pension funds and its other clients that it would trade the currencies at “the best rate of the day”. Instead, the bank traded at the worst possible rate and absorbed the difference for profit.
All of this was done because the banks were able to convince their clients to use a “standing-instruction” program which gave control of the foreign exchange to BNY Mellon. The fact that these practices were carried on over a decade just goes to show how much the bank profited off of programs built to provide for hard working Americans.
The whistleblower in this particular action was especially adept at building a case against his employer’s fraudulent activities. He recorded the amount of detail and the extensive steps that the bank took to grow its profits while at the same time providing the information to a legal team that would eventually bring about formal charges. The allegations stem from his line of work as a foreign exchange trader, so he was in a unique position to provide his expertise to the litigation.
According to the Princeton Review, the foreign exchange trader that has the “most information, the best contacts, and the strongest decision-making skills will come out ahead”. In this case, the review appears to be right in their assessment. Wilson was in the best position to help the government combat fraud and he made the decision to take a stand and pitch in. His story should be a model for other would-be whistleblowers that if you witness and are party to fraudulent and illegal activities, you should not be afraid to stand up and help bring about the necessary justice.
BNY Mellon’s foreign currency manipulation practices are just another example of how banks are trying to game the system and as a result, negatively impact the average American worker. On the other hand, this case also highlights the positive aspects of the whistleblower programs we have in place and should be a call to arms for stronger whistleblower protections. Who knows, if it weren’t for Grant Wilson’s actions, would these foreign exchange rate practices have continued for another decade? If this whistleblower’s actions bring about a settlement with the government, then justice can only be done if it makes sure that the public will be guarded against any return to these fraudulent practices by BNY Mellon in the future.