Virginia Files Case Over Forex

Virginia is saying that Bank of New York charged the state's pension funds the most expensive foreign-exchange price during the day when a trade took place rather than the rate available at the time of the trade, known as the interbank rate. When currencies were sold, Bank of New York allegedly paid the pension funds the least-expensive price.

Virginia Attorney General Ken Cuccineli, who intervened in the lawsuit in Fairfax County circuit court in Virginia on behalf of pension funds, said the bank chose "the most unfavorable price of the day" for the funds. The Virginia retirement fund has $55.1 billion at Bank of New York.

According to the Virginia complaint, Bank of New York kept the difference between the rate charged and the actual rate between 2000 and 2009. Bank of New York "kept these profits a secret from its custodial client, the Commonwealth."

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In October, State Street Corp. agreed to pay the state of Washington's investment fund, which represents pension funds, $11.7 million to settle a dispute over whether State Street overcharged foreign-exchange transactions between 1997 and 2007.

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Separately, California is pursuing a lawsuit against State Street in which it alleges State Street charged California pension funds "false or inflated" foreign-exchange rates.