The Wall Street Journal has a very interesting scoop this morning on a lawsuit accusing banks of gouging pensioners and state governments on foreign-exchange trades. This lawsuit has whistleblowers, shell companies in Delaware formed to profit on the suits, and Harry Markopolos—of Shoulda Listened to Me About Madoff fame—is behind it all.

California, Florida, Virginia, and Tennessee are investigating whether banks took advantage of the opacity of foreign-exchange pricing to steal money from customers, including state pension funds, and Washington state already got a $12 million settlement from State Street a few months ago in such a case:

The suits claim the banks didn’t charge the pension funds the currency rates that the banks paid, but consistently charged them the highest currency-conversion prices of the day, and pocketed the difference. The suits say the banks similarly overcharged when the pension funds exited the trades.

If true—and the Washington settlement and evidence the Journal reports here makes it look like there’s surely something to it—it would be just the latest way we’ve seen the banks get over on the public.

What makes this one even more interesting, though, is the campaign orchestrated by Markopolos, the most famous whistleblower of the Crash of ‘08, to organize whistleblowing, which can be worth many millions of dollars, into something of a corporate affair. States give whistleblowers up to a 30 percent cut of any award or recovery for alerting them to a fraud and helping them prove it.

(Markopolos) began looking into the currency markets in 2005, these people say, and subsequently began working with insiders at banks to gather data on the bank’s internal practices…

In Virginia, an entity called FX Analytics sued Bank of New York Mellon Corp., claiming that the financial giant overcharged a state pension fund in converting currencies for its securities trading….

In California, an entity called Associates Against FX Insider Trading and the state attorney general sued State Street Corp. in 2008 and 2009. The suit claimed that the Boston-based financial giant, “led by a group of its internal ‘risk traders,’ raided the custodial accounts of California’s two largest public pension funds, in a total amount exceeding $56 million, by fraudulently pricing foreign currency (FX) trades.”

Mr. Markopolos was involved in setting up shell companies that brought the suits in Virginia and California, according to a person familiar with the matter. Delaware corporate records show that Associates Against FX Insider Trading and FX Analytics were formed as general partnerships shortly before each of the original whistle-blower lawsuits was filed.

I would have liked to know more about why Markopolos set up these shells. The Journal says in the second paragraph that it helps the whistleblowers remain anonymous, but that needed more explanation. Does it help them remain anonymous forever or just during the investigation and possible trial?

And it’s unclear to me from the Journal’s story why this is just focused on public pension funds. Don’t private clients like hedge funds run such transactions through the banks? If so, are the banks treating the “dumb money” government funds differently than the private-sector sharpies? Seems like that would make a good story.

You can bet that there’s more to come here.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.