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BNY Mellon loses AP1 sec lending lawsuit
24 October 2013
Swedish AP1 fund awarded damages over securities lending
Sweden's Första AP-fonden (AP1) has been awarded damages by the Commercial Court in London over securities lending losses by BNY Mellon.
AP1 - one of Sweden's five national pension 'buffer' AP funds, which has assets under management of SEK 240bn ($37.8bn) - filed a lawsuit against Bank of New York Mellon Commercial Court in London over $33.7m of losses made on securities lending.
The Commerical Court ruled in favour of AP1's claim on several points, most notably that BNY Mellon failed in its care when handling the fund’s mandate. The judge ruled that this meant BNY Mellon had “been negligent” with AP1's securities lending programme, leaving it liable for damages.
Although the exact amount of damages awarded has not yet been determined, AP1 said the damages would cover “most of the loss that was incurred” as well as interest expenses. BNY Mellon will also be liable to compensate the fund for most of the legal costs involved in the trial, although the bank has the right to appeal against the ruling.
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.”
In a written statement, 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.”