Trustee Hassell's company sued for defrauding clients

A company led by a Duke Trustee is in the middle of a banking scandal.

Two lawsuits were filed against Bank of New York Mellon Corp. Tuesday, claiming that the bank allegedly defrauded its clients in foreign currency trades, The New York Times reported.

BNY Mellon’s chairman and CEO is Trustee Gerald Hassell, Trinity ’73. Hassel, who was named BNY Mellon CEO Aug. 31 after his predecessor stepped down, joined the Board of Trustees in July 2011.

The financial group is accused of charging state and other clients’ pension funds fraudulent foreign exchange fees during the last decade. Some of Duke’s investment funds were affected as were some run by other companies such as Walt Disney, according to The New York Times. The pension funds operated by the State University of New York and New York City retirees were also affected.

The U.S. Attorney’s Office in New York City filed a civil complaint in Federal District Court in New York City and is seeking hundreds of millions of dollars on behalf of the United States. The New York Attorney General filed a civil lawsuit in state court, which claims that BNY Mellon overcharged customers for processing foreign transactions and cheating them out of money. The suit seeks $2 billion—the approximate amount the bank earned during the last 10 years by misrepresenting its prices, according to the suit.

The exact amounts of money that clients­—including the University—may have lost due to the scandal is not yet known.

To defraud clients, the bank allegedly offered clients the worst currency exchange rates when clients make transactions concerning foreign securities—including currency trades, federal prosecutors said. They also alleged that the bank routinely receives more favorable prices for itself and makes a larger profit as a result.

The group’s stock fell in the immediate aftermath of the suit, declining 3.6 percent to $18.15 Tuesday morning.