ALBANY, N.Y. — New York and federal authorities have reached a $714 million settlement with Bank of New York Mellon Corp. in lawsuits alleging it fraudulently overcharged customers on currency trades for a decade.
Lawsuits filed in 2011 said BNY Mellon misrepresented rates it would give currency exchanges, providing clients nearly the worst rates of the trading day while promising the best, and then obtaining the best rates for itself — and keeping the difference.
The investigation began with a 2009 whistle-blower complaint led by Harry Markopolos, the financial specialist who alerted authorities to the Bernard Madoff scheme. Clients included public pension funds as well as mutual fund firms such as Fidelity Investments.
The Massachusetts state pension fund also was a client of BNY Mellon and had alleged that the company overcharged it by $29 million. In a separate settlement in 2013 with Massachusetts Secretary of State William F. Galvin, the bank agreed to reimburse the pension fund $15.5 million without admitting wrongdoing.
New York Attorney General Eric Schneiderman and US Attorney Preet Bharara said the bank misled customers and breached their trust. “The bank repeatedly deceived its customers and is paying a heavy penalty for it,’’ Bharara said in a statement.
The bank said this fully resolves lawsuits and enforcement proceedings concerning its standing instructions on foreign-exchange services for custody clients before early 2012.
“We are pleased to put these legacy FX matters behind us, which is in the best interest of our company and our constituents. We continue to improve our product offerings to ensure they are meeting client demand,” the bank said in a statement.
Under the settlement, the bank agreed to pay the Department of Justice and the New York attorney general $167.5 million each. The Department of Labor will receive $14 million, and the Securities and Exchange Commission, with which the company has reached a settlement in principle, will receive $30 million.
The company also has agreed to pay $335 million to settle the customer class-action litigation.
Boston-based State Street Corp. also has been part of the investigations into foreign-exchange trade pricing. Those cases are ongoing.
The company in February restated its fourth-quarter 2014 earnings to add $65 million to its legal reserves for potential settlements in the foreign exchange cases. It has now set aside a total of $185 million for these issues, $115 million of that in the fourth quarter.
Globe staff contributed to this report.