Risky investments caused losses of about $12.2m
Bloomberg has reported that a British charity has sued a Bank of New York Mellon unit that managed its funds, saying risky investments caused losses of about $12.2m.
BNY Mellon’s Insight Investment Management unit oversaw holdings 'wholly unsuitable for the foundation', including funds linked to derivatives and catastrophe bonds, according to a lawsuit filed by the Rank Foundation, a charity founded by the late film executive J. Arthur Rank.
Rank’s $74.4m portfolio was liquidated in 2009 after falling more than a quarter in 12 months, the charity said in the lawsuit, filed at a London court in July and made public this week.
The case is the latest legal dispute for BNY Mellon, the world’s largest custody bank. The New York-based lender faces lawsuits from the New York attorney general over claims it defrauded clients in foreign-exchange transactions, Chesapeake Energy Corp. over disputed bonds, and a U.S. tax court case dealing with foreign tax credits.
Along with catastrophe bonds, which are linked to insurance payouts, Insight invested in unrated and B-rated bonds, according to the charity’s claim. Insight 'failed to identify that there was a disproportionately high level of high risk investments in the Rank Portfolio', it said.
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