A BNY Mellon spokesman confirmed the accuracy of the data and said the bank's employees "tend" to price foreign-exchange trades at one end of each day's "interbank" trading range—the rates at which major banks like BNY Mellon buy and sell foreign currencies. But the bank said there was nothing improper about the practice. It said clients like the Los Angeles pension fund knew—or should have known—that the bank doesn't act in their interests when pricing the trades.
That’s something of a habitual claim on the part of big financial firms: well, duh, you should’ve known, whether it’s Goldman Sachs shorting its own product or whomever, they’re just taking a caveat emptor attitude towards the entire enterprise.
This might do in certain circumstances other than these. But historically bankers, like the doctors and lawyers that make up the big archetypal professions, have thought of themselves as basically fiduciary, public-spirited gentlemen who were trying to do fair business just as much as good business. A market-maker would frequently take a loss on a trade just to keep a good relationship up, to take one example.
The culture shifted, which is fine if this is obvious for just about everyone and the incentives are well-aligned. Neither appear to be true as of this moment.