Madoff Whistleblower: Big Banks Are Ripping Off Pension Funds

Discussion in 'Wall St. News' started by dtrader98, Aug 19, 2011.

  1. 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 story is about growing scandal in the banking industry centered around banks allegedly overcharging pension funds for currency transactions.

    "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."

    In addition to Virginia and Florida, California and Tennessee are also suing BNY Mellon and State Street Corp. over the alleged fraud.

    The man who uncovered the alleged scam, Harry Markopolos, expects all 50 states to eventually join the suit. If the name sounds familiar that's because Markopolos was a whistleblower on the Madoff Ponzi scheme, only to have his claims ignored by the SEC for the better par of a decade. (See: Harry Markopolos Says Big Banks Worse Than Madoff)

    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.

    When and if these cases go to trial is unknown, but Markopolos sure hopes to avoid a settlement. "I want to see them admit guilt," he tells Aaron Task in the accompanying interview. "If [banks] settle it feel like justice denied because they also will settle without admitting or denying guilt. That's just too easy. "

  2. Illum


    "cites internal bank emails allegedly showing that senior bank officials knew about, and endorsed"

    It's all hitting the fan

    Senior bank officials, knew..endorsed... smoking gun emails... these banks will pay up huge. Shareholders will take it on the chin for criminal activities of "senior bank officials"

    What won't the corporate officers pay to make this go away, at the end of day they don't care -50 bill to stay out of jail. Goodbye equity. Where are the corporate boards in all this. Where is the governance, freakin joke.