All About Bank of NY Mellon Lawsuits

The Bank of New York Mellon faced a number of foreign currency exchange rate lawsuits over the past decade. This case, which was reported by Bloomberg Law last year, reflects one instance where the bank overcharged retirement plans that invested in foreign securities.

Bank of New York Mellon will pay $12.5 million to settle a proposed class action accusing it of charging retirement plans excessive, unauthorized, and undisclosed amounts through the bank’s foreign exchange transactions.

The deal, announced in court papers filed Dec. 14, would end a novel lawsuit attempting to hold the bank liable under the Employee Retirement Income Security Act for allegedly overcharging retirement plans that invest in foreign securities. Investors accused BNY of purposefully giving them unfavorable exchange rates when buying foreign securities with their retirement plan assets, which allegedly allowed the bank to take an undisclosed cut from these transactions.

A federal judge declined to dismiss the case in 2017, saying the dividends and other amounts received by BNY in connection with these foreign currency transactions are ERISA plan assets that could cause the bank to become a fiduciary under the statute. Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York called this a “question of first impression.”

The settlement class includes trustees and fiduciaries of thousands of retirement plans covering “many thousands” of individual investors, the parties said. It comes nearly four years after BNY agreed to pay $84 million to settle claims involving foreign currency transactions brought by the Labor Department and the New York Attorney General.

This 2019 Reuters story tells us of a Bank of New York Mellon lawsuit involving mismanaged investments in mutual funds that were destined to fail.

A federal judge in Pittsburgh has rejected a bid by a Bank of New York Mellon unit to dismiss a proposed class action accusing it of imprudently investing thousands of trusts’ assets in poorly performing mutual funds managed by an affiliate.

BNY Mellon had argued that the plaintiffs, beneficiaries of the trusts, made only vague assertions that the mutual funds “underperformed” without establishing that they were an imprudent investment. In a decision on Friday, however, U.S. District Judge Nora Fischer adopted a magistrate judge’s conclusion in April that plaintiffs’ allegations were adequate to survive a motion to dismiss.

The Bank of New York Mellon has made shady investments that are bad for its investors for a long time, as is apparent by this 2012 lawsuit summary by CFLA (via Reuters). This case involves risky mortgage loans the bank allegedly should not have pursued.

A federal judge rejected Bank of New York Mellon Corp’s bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp.

U.S. District Judge William Pauley in Manhattan said on Tuesday that bondholders who invested in 26 trusts alleged to have contained risky mortgage loans from the former Countrywide Financial Corp may pursue claims against Bank of New York Mellon. He dismissed a variety of other claims.

The decision relates to a lawsuit challenging Bank of New York Mellon’s performance of its day-to-day obligations as a trustee, which includes ensuring that underlying home loans are properly documented and that bondholders’ rights are protected.

Beth Kaswan, a lawyer for four pension funds in Chicago, Michigan and Pennsylvania that brought the case, said the decision leaves intact claims over securities backed by more than $30 billion of loans, and which have suffered more than $9 billion of losses or delinquencies.

CityWire brings us this story of a 2018 lawsuit from an ex-Bank of New York Mellon employee who was ousted from the bank after raising concern about suspicious client activity.

BNY Mellon is being sued for unlawful termination by a former employee who claims he was fired for raising concerns over a corporate Panamanian client he suspected to be engaged with money laundering and public corruption.

Charles Austin, a former vice president and senior relationship manager within BNY’s corporate trust division, says that he was pushed out of the bank after he recommended it end a relationship with Panamanian financial services firm Global Bank after a ‘weeks-long’ investigation in April 2017. 

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In addition to filing a wrongful termination suit, Austin claims that BNY violated the Sarbanes-Oxley Act, which protects corporate whistleblowers, as he alleges he was fired after reporting his conclusions about the Global Bank and calling into BNY Mellon’s ethics hotline to report ‘adverse treatment’ by his colleagues. 

The Bank of New York Mellon is also no stranger to employee lawsuits. In this TribLive lawsuit summary from 2020, an ex-bank employee claims she was fired for her posting about a car driven to a protest.

A former employee claims in a lawsuit that BNY Mellon fired her after she made a social media comment referencing a group protesting the police shooting of unarmed teen Antwon Rose , court records show.

The lawsuit filed in federal court alleges that Lisa Ellis, a Mt. Lebanon resident and senior analyst at the company’s wealth management department in Pittsburgh, was fired because she is white. It accuses BNY Mellon officials of violating employment discrimination and civil rights laws by firing her “without notice and without conducting an investigation” on July 3, three days after she made a Facebook post flagged as controversial.

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The lawsuit further alleges that activists worked with a BNY Mellon human resources official to solicit people to complain about Ellis and build a case to have her terminated, with some activists reportedly boasting about their ability to get white people fired, Colianni said.

According to the lawsuit, BNY Mellon provided “conflicting reasons” for firing Ellis, first referring to their code of conduct and later, when Ellis filed for unemployment benefits, saying she was fired for “poor job performance” — an assessment she claims contradicts prior positive performance reviews during her three-year tenure with the company.