Big Banks Ripping Off Pension Funds?
I have already discussed the topics of defrauding pension funds and how banks are overcharging pension funds on currency transactions (and other transactions). Thank God there are people like Harry Markopolos out there, chasing the Madoffs of this word, and now taking on a much bigger cause.
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. "
It was almost three years ago since I wrote a comment on how the pension Ponzi scheme dwarfs the Madoff scam. Watch the interview below and pay close attention to what Markopolos is saying. "Someone has to chase the bad guys" or else they will loot trillions in pensions.