UK court awards damages to Swedish fund
28 October 2013 London
Image: Shutterstock
The Commercial Court in London has awarded undisclosed damages to Swedish fund Första AP-fonden (AP1).
The action was lodged by the fund on 17 October in response to losses incurred as a result of securities lending transactions handled by BNY Mellon.
The court ruled in favour of AP1’s claim on several points, with the judge noting in the ruling that BNY Mellon has failed in its care when handling the fund’s mandate.
The ruling stated that BNY Mellon had been “negligent” with AP1’s securities lending programme, leaving the bank liable for the damages incurred.
The damages will cover the majority of the fund’s losses, as well as expenses accrued in lost interest. BNY Mellon will also cover most AP1’s legal costs.
Johan Magnusson, managing director of AP1, said: “It is very satisfying that the Commercial Court in London has found in our favour. The judge stated that BNY Mellon 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.”
BNY Mellon has indicated that it may appeal against the ruling.
A spokesperson for the bank 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 judgement that ruled against us and are considering our options.”
The action was lodged by the fund on 17 October in response to losses incurred as a result of securities lending transactions handled by BNY Mellon.
The court ruled in favour of AP1’s claim on several points, with the judge noting in the ruling that BNY Mellon has failed in its care when handling the fund’s mandate.
The ruling stated that BNY Mellon had been “negligent” with AP1’s securities lending programme, leaving the bank liable for the damages incurred.
The damages will cover the majority of the fund’s losses, as well as expenses accrued in lost interest. BNY Mellon will also cover most AP1’s legal costs.
Johan Magnusson, managing director of AP1, said: “It is very satisfying that the Commercial Court in London has found in our favour. The judge stated that BNY Mellon 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.”
BNY Mellon has indicated that it may appeal against the ruling.
A spokesperson for the bank 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 judgement that ruled against us and are considering our options.”
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