- Bank has lost several motions to dismiss case over four years
- Retirement funds claim they lost billions on Countrywide
Bank of New York Mellon Corp. must face a lawsuit by pension funds claiming the company caused billions of dollars in damages in its role as trustee for mortgage-bond investors.
The bank’s motion to dismiss the case over jurisdiction failures was denied Friday by U.S. District Judge William Pauley in Manhattan. The bank’s previous bids for dismissal of the case also failed, though some claims were thrown out.
BNY Mellon, based in New York, was accused of disregarding its duties as trustee for investors in mortgage bonds of Countrywide Financial Corp., which collapsed during the financial crisis. The complaint was brought by funds including the City of Grand Rapids General Retirement System and the Retirement Board of the Policemen’s Annuity & Benefit Fund of the City of Chicago.
A BNY Mellon spokesman, Kevin Heine, declined to comment on the ruling.
According to the funds, the bank failed to review loan files for mortgages that backed its securities to ensure there were no missing or defective documents. BNY Mellon also failed to act on behalf of investors to make sure that loans with “irregularities” were removed from the pools of mortgages, according to the complaint.
The bank caused bondholders to suffer billions of dollars in damages and created “considerable uncertainty” regarding investors’ ownership interest in the mortgage loans backing their securities, the funds said.
The case is Retirement Board of the Policemen’s Annuity & Benefit Fund of the City of Chicago v. Bank of New York Mellon, 11-cv-05459, U.S. District Court, Southern District of New York (Manhattan).
BK (Bank of New York Mellon Corp.)