Frsta AP-fonden (AP1), one of Sweden’s largest pension managers, is suing The Bank of New York Mellon in London.
AP1 claims BNY Mellon wrongfully deducted about $35.5 million from its managed account in November 2009 to cover losses the pension manager incurred the year prior.
Acting as the fund’s securities lending agent, claims AP1, BNY Mellon’s investment decisions were in breach of the fund’s investment guidelines. The suit relates to the investment of AP1 collateral in notes issued by Sigma Finance Inc., which went into receivership in October 2008.
In a statement made to Global Custodian, BNY Mellon spokesman Tim Steele said: “We believe our behavior was appropriate and we will defend ourselves vigorously against these claims, which are without merit. As a matter of policy, we cannot comment further on the details of an individual client case.”
Steele was clear to point out that the suit relates to BNY Mellon’s securities lending business within its Asset Servicing group, and not related to its Asset Management group, as has been widely reported.
“We have been trying to come to an agreement with BNYM for some time, unfortunately without success,” says Johan Magnusson, managing director of Frsta AP-fonden. “We therefore see no option other than to file a lawsuit in order to have this matter resolved by the court. We believe that BNYM have a case to answer and we have confidence in the merits of our position.”