WSJ: BNY Mellon Bank Acts To Make Money For Itself, Not Client

Bank Prices Trades in Bank’s Favor – Surprise Surprise

The WSJ today reports on an examination of the trading practices of BNY Mellon in trading foreign currencies for clients.

Bank Gave Client Least Favored Rates

Basically what happens is this.

1. Since a client like the one reviewed, the Los Angeles County Employees Retirement Association, does not hire its own personnel to manage investments in foreign currencies, the client turns that function over to the institution making the trades, in this case BNY Mellon.  The Bank both manages the trades and places the trades through its trading desk.  Conflict anyone?

2. It turns out the exchange rates that BNY Mellon used were about as least favorable as possible to the Client.  This means millions in extra profits for BNY Mellon.

In one of the most candid statements every made, a spokesman for the BNY Mellon bank said

clients like the Los Angeles pension fund knew—or should have known—that the bank doesn't act in their interests when pricing the trades.

Well, they know it now.