Court Favors Swedish AP-fund Over BNY Mellon in Securities Lending Lawsuit

A commercial court in London has ruled in favor of Swedish pension fund Första AP-fonden following a securities lending lawsuit that the fund brought against BNY Mellon as a result of losses it incurred in 2008.

The suit relates to a sum of $33.7 million. The judge had ruled in favor of the fund on various points, including that the custodian bank had failed in its care in their handling of the fund’s mandate and hence “been negligent”.

Under the ruling, BNY Mellon will be liable for damages to Första AP-fonden, which is one of five AP-funds in the Swedish national income pension system. The court ruled that the yet-to-be-determined damages will cover most of the loss that was incurred by the fund as well as interest expenses and most of the legal costs connected to the trial. BNY Mellon has the right to appeal the ruling.

“It is very satisfying that the Commercial Court in London has found in our favor. The judge stated that BNYM has been guilty of many violations and that Första AP-fonden has acted correctly. Our efforts to demand redress for the losses the bank has caused us, and therefore the Swedish pension system, have been successful,” says Johan Magnusson, managing director of Första AP-fonden.

A statement from BNY Mellon said: “The London Court found that there was no deliberate attempt by BNY Mellon to mislead and found that we acted properly, both in purchasing Sigma and in adopting a hold-to-maturity strategy. We disagree with the portion of the judgment that ruled against us and are considering our options.”