(Bank of New York Mellon article updated with company statement)NEW YORK ( TheStreet) -- New York Attorney General Eric Schneiderman and the city of New York are suing Bank of New York Mellon ( BK) for nearly $2 billion, for allegedly defrauding clients in foreign currency exchange transactions. The NY Attorney General said a lengthy investigation into the custody bank's practices found that over a 10-year period BNY Mellon routinely provided customers of its "Standing Instructions" program the worst or nearly the worst rates of the trading day instead of providing them with the "best rate of the day" or "best execution" as promised. The lawsuit said BNY Mellon employee testimony admitted the bank "neither sought the best rates for Standing Instructions customers nor provided best execution." The lawsuit alleged that BNY Mellon concealed its pricing practices from its clients, and made its profit by pocketing the difference between the worst price of the day, which it charged its clients, and the actual market price at the time of the trades. According to the investigation, the currency exchange trades through its Standing Instruction program were "seven times more profitable" to the bank than foreign exchange transactions that were directly negotiated. New York City pension funds including the New York City Employee Retirement System, the Teachers Retirement System of the City of New York, the New York City Police Pension Fund, Subchapter 2, and the New York City Fire Department Pension Fund, Subchapter 2 were among those who lost tens of millions of dollars as a result of its fraudulent rates, the lawsuit said. The attorney general seeks to force BNY Mellon to return its profits, restitution, damages, and with respect to the False Claims Act violations, triple damages and penalties of $12,000 per violation. The Justice Department also filed a separate suit against BNY Mellon. "Banks are expected to provide a reliable and honest service to their customers. Unfortunately, this does not seem to be the case as it relates to the Bank of New York Mellon and their foreign exchange services provided to the New York City Pension Funds," Deputy Comptroller for Legal Affairs Ricardo Morales said. "We remain confident that New York City's pensioners and taxpayers will recoup what they are rightfully owed." Bank of New York Mellon spokesperson Kevin Heine said in a statement that the lawsuit "fundamentally misunderstands and mischaracterizes the global foreign exchange market and the valuable services we provide to our clients as a principal in foreign exchange transactions." He added that the U.S. attorney's lawsuit suffered from the same "flawed analysis" as the NY AG's lawsuit and that the bank would fight these claims "vigorously." -- Written by Shanthi Bharatwaj from New York.