Commonwealth ex rel. FX Analytics v. Bank of New York Mellon

84 Va. Cir. 473, 2012 WL 7874398, 2012 Va. Cir. LEXIS 40
CourtFairfax County Circuit Court
DecidedMay 1, 2012
DocketCase No. CL-2009-15377
StatusPublished
Cited by3 cases

This text of 84 Va. Cir. 473 (Commonwealth ex rel. FX Analytics v. Bank of New York Mellon) is published on Counsel Stack Legal Research, covering Fairfax County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commonwealth ex rel. FX Analytics v. Bank of New York Mellon, 84 Va. Cir. 473, 2012 WL 7874398, 2012 Va. Cir. LEXIS 40 (Va. Super. Ct. 2012).

Opinion

By Judge R. Terrence Ney

This matter comes before the Court on Defendant The Bank of New York Mellon’s (“BNYM” or “the Bank”) Motion for Reconsideration of this Court’s ruling on the February 10,2012, Demurrer, and BNYM’s Notice of Supplemental Authority. After considering the pleadings and memoranda of counsel, the Court took the matter under advisement. Oral argument is not necessary. The following embodies the Court’s ruling.

Parties

The description of the parties is derived from the Commonwealth’s Second Amended Complaint in Intervention. See Commonwealth of Virginia, ex rel. FX Analytics, Case No. CL-2009-15377, Second Am. Compl. ¶¶ 28-56.

The Commonwealth of Virginia is the Plaintiff and brings this Complaint on her own behalf and on behalf of those agencies of state government, political subdivisions, and divisions of political subdivisions as more fully set forth in the Complaint.

[474]*474The Bank of New York Mellon is a New York state chartered bank, which houses parent company Bank of New York Mellon Corporation’s institutional businesses, including Asset Servicing, Issuer Services, Treasury Services, Broker-Dealer and Advisor Services, and the bank-advised business of Asset Management.

The following parties shall be known collectively as the “Virginia Funds.”

The Virginia Retirement System (“VRS”) is a body corporate and political subdivision of the Commonwealth of Virginia, pursuant to Va. Code §§ 51.1-124.3 and 51.1-124.4, and is headquartered in Richmond, Virginia. VRS administers a defined benefit plan, a group life insurance plan, a deferred compensation plan, and a cash match plan for the Commonwealth’s public sector employees, as well as an optional retirement plan for selected employees, and the Virginia Sickness and Disability Program for state employees. VRS currently administers benefits and services for approximately 600,000 members, retirees, and beneficiaries. VRS has been a custodian banking client of BNYM, or its predecessor entities, since 1988.

The Fairfax County Employees’ Retirement System provides retirement benefits for the classes of employees set forth in the ordinance. The Fairfax County Employees’ Retirement System is a cost-sharing, multiple employer, public employee retirement system providing defined benefit pension plan coverage to full-time and certain part-time Fairfax County and Fairfax County public schools’ employees not covered by the Fairfax County Police Officers Retirement System, the Fairfax County Uniformed Retirement System, the ERFC, or VRS.

The Fairfax County Police Officers Retirement System was created to provide defined benefit pension plan coverage for sworn full-time law enforcement officers to the Fairfax County Police Department.

The Fairfax County Uniformed Retirement System was established in 1974 as a public employee retirement system providing defined benefit pension plan coverage for uniformed or sworn employees of the Fire and Rescue Department, helicopter pilots, the Sheriff’s Department, the animal control division, and certain park police officers. In 2005, membership was extended to employees in non-administrative positions of the Department of Public Safety Communications, formerly included in the Fairfax County Employee’s Retirement System.

The Fairfax County Employee’s Retirement System, the Fairfax County Police Officers Retirement System, and the Fairfax County Uniformed Retirement System have been custodial banking clients of BNYM, or its predecessor entities, since 2002.

The Educational Employee’s Supplemental Retirement System of Fairfax County (“ERFC”) is a retirement system established by the Fairfax County Board of Supervisors. The ERFC is a defined benefit plan qualified [475]*475under 401(a) of the Internal Revenue Code. Funding is provided in part by employer and member contributions to the plan; income earned through investment of the plan’s assets provides the majority of funding. ERFC was established in 1973 and its members include retirees, deferred, vested, and active Fairfax County Public Schools personnel who are employee full-time in monthly paid educational, administrative, and support staff positions. The ERFC has been a custodial banking client of BNYM, or its predecessor entities, since 1995.

• FX Analytics is the Relator in this suit. The Relator was employed in the Foreign Exchange (“FX”) trading department at BNYM in Pittsburgh, Pennsylvania. The Relator has more than twenty years of experience in foreign exchange currency trading. The Relator worked at BNYM for more than ten years. Throughout that time, the Relator observed or participated in reporting on interbank issues and developments and broader foreign exchange matters to the executive level of the Bank. The Relator observed BNYM’s FX trading for its custodial clients.

Procedural History

The original complaint in this action was filed in 2009 by the Relator, FX Analytics. The Commonwealth, pursuant to Virginia Code § 8.01-216.2, intervened as Plaintiff in the action and filed her First Complaint in Intervention on August 11,2011.

This Court originally heard BNYM’s Demurrer to the Complaint on November 18, 2011. After argument, the Court sustained the Demurrer as to all causes of action under the Virginia Fraud Against Taxpayers Act (“VFATA”) except for a cause of action under § 8.01-216.3(A)(2) of the Act.

On February 10, 2012, the Court heard argument on a second Demurrer filed by BNYM. BNYM again argued that the Commonwealth had failed to state a cause of action under § 8.01-216.3(A)(2). The Court overruled that Demurrer.

BNYM then filed this Motion for Reconsideration and Notice of Supplemental Authority requesting the Court to reconsider its February 10, 2012, order overruling its Demurrer. This Motion is, in effect, a third effort by BNYM directed at the Court’s mlings with specific respect to § 8.01-216.3(A)(2).

Facts

The Second Amended Complaint-in-Intervention alleges that BNYM violated the Virginia Fraud Against Taxpayers Act (“VFATA”), Va. Code § 8.01-216.1 et seq., through the manner in which it executed certain foreign exchange transactions, known as standing instruction transactions [476]*476with the Funds. Specifically, the Complaint alleges that BNYM knowingly presented regular accountings of all transactions in the custody accounts for approval. The Complaint alleges that these accountings bore no relation to actual FX trades. The Complaint further alleges that BNYM devised a scheme to conceal those false rates, thereby allowing BNYM to profit from handling taxpayer retirement funds to the detriment of the Virginia Funds and the Commonwealth.

Analysis

A. Standard for Demurrer

“A demurrer admits the truth of the facts contained in the pleading to which it is addressed, as well as any facts that may be reasonably and fairly implied and inferred from those allegations. A demurrer does not, however, admit the correctness of the pleader’s conclusions of law.” Yuzefovsky v. St. John’s Wood Apts., 261 Va. 97, 102, 540 S.E.2d 134, 136-37 (2001), quoted in DurretteBradshaw, P.C. v. MRC Consulting, L.C., 277 Va.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Commonwealth v. ProNurses
91 Va. Cir. 197 (Richmond County Circuit Court, 2015)
United States v. Bank of New York Mellon
941 F. Supp. 2d 438 (S.D. New York, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
84 Va. Cir. 473, 2012 WL 7874398, 2012 Va. Cir. LEXIS 40, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commonwealth-ex-rel-fx-analytics-v-bank-of-new-york-mellon-vaccfairfax-2012.