South Carolina to sue BNY Mellon
28 January 2011 South Carolina
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The Treasurer's Office of the state of South Carolina has commenced legal action against BNY Mellon.
The lawsuit aims to recover losses that it says were the result of the bank's failure to adhere to investment guidelines in its securities lending programme. Curtis Loftis, the state treasurer, says he aims to recover approximately $200 million.
"Our contract called for investments limited to conservative, high quality instruments," Loftis said. "The bank inappropriately invested in mortgage backed securities comprised of sub prime mortgages with maturity dates greater than allowed. Also, the bank invested in certain debt instruments in the now bankrupt Lehman Brothers investment bank. Because of the contract violations, the State has suffered a $200 million dollar loss.
"We allege that the Bank of New York Mellon has violated its agreement with the State of South Carolina, and breached its fiduciary duties. We have filed suit in order to bring this matter to an orderly, lawful conclusion."
The lawsuit aims to recover losses that it says were the result of the bank's failure to adhere to investment guidelines in its securities lending programme. Curtis Loftis, the state treasurer, says he aims to recover approximately $200 million.
"Our contract called for investments limited to conservative, high quality instruments," Loftis said. "The bank inappropriately invested in mortgage backed securities comprised of sub prime mortgages with maturity dates greater than allowed. Also, the bank invested in certain debt instruments in the now bankrupt Lehman Brothers investment bank. Because of the contract violations, the State has suffered a $200 million dollar loss.
"We allege that the Bank of New York Mellon has violated its agreement with the State of South Carolina, and breached its fiduciary duties. We have filed suit in order to bring this matter to an orderly, lawful conclusion."
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