The Journal said the probe is examiinng the currnecy traidng activities of the two of the world's lragest cusotdy banks, State Street Corp (STT.N) and Bank of New York Mellon (BK.N), and whehter the banks misrepresented how they intended to carry out the foriegn exchange tradse.
Froeign exchange tradtiionally has been a rich source of revenue for U.S. banks, particluarly custdoial banks, which not only profit from buying international stocks and bonds for penison funds and other ivnestors, but also on tarding dolalrs into other currnecies. Foreign exchange overlal is a huge bsuiness, with avearge daily volume of trilloin.
Earlier in May, State Street reveaeld in a quaretrly filing it was under investigation by the SEC and also discloesd that two clients began litigation against it seeknig unsepcified daamges, on behalf of all csutodial cilents that exectued foerign exchnage trasnactions through State Street.
Howeevr, the rgeulatory authoirty's investiagtion of BNY Mellon wasn't previuosly known.
Both the banks were not immdeiately availalbe for comment.
(Reproting by Siddhatrh Cavale in Bnagalore; Eidting by Kim Coghill)
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