Madoff Whistleblower Markopolos Uncovers Another Scam
Video - Harry Markopolos with Aaron Task on Banks' Pension Scam - Aug. 19, 2011
Banks Are Ripping Off Pension Funds By Backdating Currency Transactions
Amid all the market volatility and weakness in the financial sector of late, you may have missed this WSJ front page story: "States Go After Big Bank on Forex".
The man who uncovered the alleged scam, Harry Markopolos, expects all 50 states to eventually join the suit. In this case, Markopolos says BNY Mellon and State Street we're taking about "three tenths of a percent from every forex transaction for pension funds" by back-timing the trade to benefit banks at the detriment of their pension fund clients. "It's almost the exact same scheme as the market timing scandals of 2003," he claims.
"Attorneys general in Virginia and Florida filed civil suits against BNY Mellon alleging that the bank cheated pension funds in those states by choosing improper prices for currency trades the bank processed for the funds," The WSJ reports. "The Virginia lawsuit, filed in a Fairfax, Va., state court, cites internal bank emails allegedly showing that senior bank officials knew about, and endorsed, a currency-trading method that hurt state pensioners."
Aug 22, 2011 at 11:25 AM
Reader Comments (4)
http://dealbook.nytimes.com/2012/12/20/peter-madoff-is-sentenced-to-10-years-for-his-role-in-fraud/
Merry Christmas!
http://www.bloomberg.com/news/articles/2016-04-05/boston-based-bank-executives-indicted-over-commissions-scheme
Two former executives at State Street Corp. were indicted in what the U.S. Justice Department said was a “brazen fraud” involving secret commissions applied to billions of dollars in securities trades.
Ross McLellan, 44, and Edward Pennings, 45, conspired from February 2010 to September 2011 to place commissions on fixed-income and equity trades for at least six clients of the bank’s transition management business, according to U.S. Attorney Carmen Ortiz in Boston. That unit helped institutional clients move investments among asset managers and liquidate large portfolios.
“The secret conversations and backroom plotting laid bare in today’s charges paint a vivid picture of a brazen fraud,” Ortiz said Tuesday in a statement. The men “plotted to overcharge their clients by millions of dollars, and to hide their tracks.”
The defrauded clients included an Irish government pension fund, a British government pension fund and a Middle East sovereign wealth fund, according to the indictment.
Both men are charged with conspiracy, securities fraud and wire fraud. McLellan, of Hingham, Massachusetts, pleaded not guilty Tuesday in federal court in Boston and a magistrate judge set bail at $250,000 secured by his home as collateral. He had shackles on his ankles and wore jeans and a faded long-sleeved T-shirt with an image on the back of a big smiling whale. Pennings is believed to be living abroad, according to Ortiz’s statement.