BNY Mellon failed to protect retirement savings, lawsuit claims
A Bank of New York Mellon Corp. employee filed a lawsuit on Friday against the bank and about 30 directors and executives on the grounds that they breached fiduciary duties by failing to prevent a 401(k) retirement savings plan from losing millions of dollars since 2008.
Isabel F. Sansano of New Jersey asked in the five-count lawsuit filed in federal court in Pittsburgh that the bank and its co-defendants repay the plan for losses resulting from "imprudent" investments and restore profits to the retirement savings plan. The suit seeks payment of damages.
Sansano, who is asking that the lawsuit be certified as a class action, contends the plan lost money because it invested heavily in the bank's stock, which plunged in value due to mismanagement by some bank executives and directors.
The lawsuit claims the stock dropped from a high of $49.40 on Jan. 3, 2008, to a closing price of $18.97 a share as of Oct. 14.
The 64-page lawsuit contends the stock dropped in value because of BNY Mellon's alleged practice of overcharging foreign currency trading clients, which was revealed through lawsuits filed by the attorneys general of Virginia, Florida and New York.
The Department of Justice and Massachusetts securities regulators filed separate cases against the bank, alleging it defrauded clients by overcharging them by $2 billion over the past decade.
Under the Employee Retirement Income Security Act, the defendants must repay the plan for a breach of fiduciary duty, the lawsuit states. The plan is administered in Pittsburgh, according to the lawsuit.
Pittsburgh attorney Gerald L. Rutledge, who represents Sansano, and BNY Mellon spokesman Ron Gruendl declined to comment on the lawsuit.
Also named in the suit are the bank's benefits committee; plan administration members Robert Perego, Lisa B. Peters, John A. Park and 10 other unidentified people; investment committee member Leo P. Grohowski and 10 unidentified committee members; plus 10 unidentified monitoring committee members.
The lawsuit claims members of those committees breached their fiduciary duty by failing to manage the plan's assets prudently.