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Ohio Treasurer Josh Mandel
Mandel Protects Ohio Retirees and Taxpayers,
Replaces Banks Accused of Defrauding Pension Funds
Treasurer Designates New International Custodians for Ohio Pension Funds;
Move Follows $16 Million Lawsuit Filed by Ohio Attorney General Against
BNY Mellon, Prompted by Treasurer-requested Investigation into Foreign
Currency Transactions
COLUMBUS - State Treasurer of Ohio Josh Mandel has been fighting to
protect Ohio pension funds from fraud and illegal activity for the last
two years, in the wake of allegations across the country that East
coast banks have been systematically exploiting public pension funds
and taxpayers. Treasurer Mandel announced today that he will
replace Ohio’s international custodians, Bank of New York Mellon and
Boston-based State Street bank, who were appointed to hold public funds
under the previous Treasurer and have been accused of defrauding
pension funds in Ohio and numerous other states. The Treasurer
today designated new international custodians for $41 billion in
international assets of Ohio’s public pension funds.
“As the chief watchdog of Ohio’s tax dollars I feel a responsibility to
root out fraud wherever I see or smell it. The pattern of fraud
that has been detailed and alleged across the country against banks
entrusted to safeguard funds for Ohio teachers, police, firefighters,
and retirees is an extreme breach of the public trust. I have
been fighting against abuse and corruption in banks that serve as
international custodians for Ohio pension funds for the last two years,
and as Treasurer I feel that I have a duty to end custodial agreements
with banks being sued for defrauding taxpayers,” said Treasurer
Mandel. “Last year I requested an investigation into whether
banks providing international custody services in Ohio were exploiting
pension funds when conducting foreign currency exchange
transactions. I would like to commend Attorney General Mike
DeWine for aggressively pursuing banks that may have engaged in illegal
activity and for his recent decision to file a lawsuit to recoup $16
million for Ohio pension funds. His findings reinforced my
decision to designate new international custodians for Ohio pension
funds to safeguard retiree and taxpayer dollars.”
Treasurer Mandel’s move to designate new international custodians
follows a $16 million lawsuit filed by Ohio Attorney General Mike
DeWine on March 12, 2012, against Bank of New York Mellon alleging
fraud, deceptive practices and breach of contract when conducting
foreign currency exchange transactions. State Street is currently
being sued by the U.S. Department of Justice and numerous other states
over similar fraud and deceptive practice allegations.
After a thorough review of proposals from financial institutions
interested in providing custodial services for Ohio, Treasurer Mandel
made the decision to replace Bank of New York Mellon and State Street
banks and to designate new international custodians for Ohio’s pension
funds and other taxpayer supported entities. Today,
Treasurer Mandel designated the following international custodians for
the four Ohio public pension funds that deal in international
securities:
Fund Name - New Bank Designee - Prior Designee
Ohio Public Employees Retirement System - JP Morgan - State Street
Ohio Police & Fire Pension Fund - JP Morgan - State Street
School Employees Retirement System - Citi Bank - BNY Mellon
State Teachers Retirement System - Citi Bank - State Street
International custodians hold investments such as securities, stocks
and bonds, and conduct financial transactions on behalf of pension
funds. Treasurer Mandel announced these designations after
evaluating proposals from all financial institutions interested in
providing international custody services for the state of Ohio, and
after consulting with Ohio pension funds. International custody
agreements going forward will include safeguards to protect Ohio
pension funds from fraudulent or deceptive practices by banks
conducting foreign currency exchange transactions.
Background
Treasurer Mandel has been leading the fight to investigate and root out
fraud and deceptive practices against Ohio pension funds and taxpayers
for the last two years. On June 14, 2011, Treasurer Mandel
formally requested that the Attorney General investigate whether
international custodians for the pension funds exploited Ohioans
through foreign currency exchange transfers.
Last week, Ohio Attorney General Mike DeWine filed a lawsuit against
The Bank of New York Mellon for deceptive foreign currency exchange
practices. The lawsuit is on behalf of the Ohio Police & Fire
Pension Fund (OP&F) and the School Employees Retirement System
(SERS), and alleges breach of contract, fraud, violations of the Ohio
Deceptive Trade Practices Act, and unjust enrichment. Attorney
General DeWine is seeking damages in excess of $16 million for losses
to OP&F and SERS. Announcing the lawsuit, Attorney General
DeWine alleged that BNY Mellon systematically overcharged these funds
on foreign currency transactions and “violated the terms of their
custodial agreements with the Ohio funds, and exploited the volatility
of the foreign currency market to their advantage at the expense of
Ohio pensioners and their families.”
Resources
View a timeline of actions taken by Treasurer Mandel and officials in
other states over the last two years to investigate and prosecute
alleged fraud
View Treasurer Mandel’s letter requesting an investigation into banks
conducting foreign currency exchanges on behalf of Ohio pension funds
View Attorney General DeWine’s announcement that he filed a complaint
against the Bank of New York Mellon for deceptive foreign currency
exchange practices
See the referenced links by clicking here
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