BNY Mellon agreed to pay the amount to settle lawsuits brought by the US and New York State, private class action lawsuits brought by its customers, and investigations by the Securities and Exchange Commission (SEC) and the US Secretary of Labor (DOL).
The bank was accused by the federal and New York state authorities of offering representation to clients to provide "best rates" and "best execution," but instead offered them the worst interbank rates.
The authorities also accused BNY Mellon of securing the best rates for itself and profiting on the "spread."
Out of the total $714m, the bank agreed to pay $335m to the US and New York State and a civil penalty of $167.5m, while another $335m will be paid to resolve private class action lawsuits filed by the bank’s customers.
To resolve DOL’s claims under the Employee Retirement Income Security Act (ERISA), the bank will pay $14m to its ERISA plan customers.
Federal authorities said BNYM has accepted responsibility for its conduct and as cited in Reuters, also agreed to terminate David Nichols, its head of products management, and other executives.
Manhattan US Attorney Preet Bharara said: "The Bank of New York Mellon’s custody clients, many of whom are public pension funds and non-profit organizations, trusted the Bank to be honest about the financial services it was providing and to deal with them fairly.
"The bank repeatedly deceived its customers and is paying a heavy penalty for it. We will not hesitate to pursue and punish financial institutions and their executives who exploit their customer base to improve their bottom lines."
New York State Attorney General Schneiderman said: "The Bank of New York Mellon misled customers and traded at their expense.
"Today’s settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and will face serious consequences for their wrongdoing."
The civil fraud lawsuits were filed by the US and New York State each against BNYM on 4 October 2011. The proposed settlements are subject to court approval.
Image: The Bank of New York Mellon headquarters at 1 Wall Street. Photo: courtesy of Jim in Times Square
