A U.S. District Judge has granted a pension fund permission permission to claim damages from BNY Mellon after the bank allegedly lost $25 million in a securities lending program involving Lehman Brothers debt.
Judge John Blackey of the U.S. District Court of the Northern District of Illinois gave the green light for the plan and BNY Mellon to agree on a settlement, after he deemed it was imprudent for BNY Mellon to hold Lehman debt given “the circumstances existing in the market”.
The plaintiffs, the Teamsters Local 710 Pension Fund, claim BNY Mellon lost $25 million in pension fund assets when the bank purchased Lehman-backed floating rate notes using securities lent from the plan’s accounts.
The plan filed suit against two BNY Mellon entities in 2013, accusing them of judiciary imprudence and disloyalty under the Employee Retirement Income Securities Act (ERISA).
BNY Mellon tried to have the case dismissed last year but was rejected. The bank then filed a motion for judgment on the pleadings, which was also rejected on March 16, 2015.
The decision from the U.S. Court Judge is the latest in a string of securities lending lawsuits against the bank in relation to losses incurred during the financial crisis.
In October 2013, a U.K. court ruled in a favour of Swedish pension fund Första AP-fonden, which claimed BNY Mellon had lost $33.7 million. Also in June 2013, BNY Mellon agreed to pay a $34 million settlement to the South Carolina State Treasurer.
U.S. Judge Grants BNY Mellon Securities Lending Suit
A U.S. District Judge has granted a pension fund permission permission to claim damages from BNY Mellon after the bank allegedly lost $25 million in a securities lending program involving Lehman Brothers shares.
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