Whistleblower documents illuminate case against BNY Mellon

Confidential whistleblower documents that helped spark a massive state and federal investigation into how Bank of New York Mellon Corp charged pension funds for currency exchange, provide a rare window into how a bank insider aided a lawsuit against the bank.

The information provided by whistleblower Grant Wilson, who worked at BNY Mellon, included a detailed analysis of how the bank allegedly provided "fictitious" foreign-currency costs for pension funds. The analysis included a step-by-step guide to how currencies were traded and internal profits generated by the bank, according to documents. A memo detailing fellow employees also was provided.

Aided by Wilson's information, multiple states, including Virginia, Florida and New York, have sued BNY Mellon, alleging that the bank improperly charged state and local pension funds for foreign exchange. The Department of Justice also has sued the bank. The allegations center on claims that BNY Mellon provided unfavorable currencyexchange rates for state and local pension funds for a decade. In a lawsuit in October, the New York attorney general alleged BNY Mellon earned $2 billion over the decade from the trading. A bank spokesman said the bank believes that many comments detailed in the documents were taken out of context or not said at all. "A handful of purported statements cherry-picked from millions of documents gathered over a decade do not reflect the way we do business or the value we provide our client," the spokesman said. The documents illuminate why insiders with highly confidential information can be a potent force in whistleblower lawsuits. Much of the information a whistleblower provides remains confidential.

Wilson, for example, worked at the bank even as he secretly provided to his legal team - - lawyers in Boston and New York -- information about how BNY Mellon allegedly conduct- ed foreign-exchange trading.

Wilson's information was provided to the legal team that filed whistleblower lawsuits against BNY Mellon in 2009 and then aided state attorneys general in subsequent probes. The legal team includes Boston lawyer Michael Lesser, and Philip Michael, a lawyer in New York, as well as Harry Markopolos, a fraud investigator best known for warning that Bernard Madoff was operating a fraudulent scheme. Lesser, an attorney at Thornton & Naumes, said Wilson was not available for a comment. The information then was provided by Wilson's lawyers to the Florida attorney general in 2009 and 2010.