This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Salvation Army Complaint Against Bank Of New York Mellon Stands





NY Supreme Court Decision Supports Claims of "Gross Mismanagement" of Securities Lending Portfolio

ATLANTA, Jan. 29, 2013 /PRNewswire-USNewswire/ -- The Supreme Court of the State of New York upheld The Salvation Army Southern Territory's lawsuit against The Bank of New York Mellon (BK) alleging, among other things, that the Bank grossly mismanaged its securities lending account.  The mismanagement led to losses that would have been avoided had the bank followed The Salvation Army's highly conservative investment mandate emphasizing principal preservation and liquidity. The court rejected BNY's motion to dismiss The Salvation Army's complaint, upholding three of the most critical claims that the organization brought against the bank: gross negligence, breach of fiduciary duty and breach of contract.

"This is an important step for The Salvation Army in rectifying the mishandling of our funds," said Lt. Colonel David Mothershed, Chief Investment Officer for The Salvation Army Southern Territory. "For three years we have pushed for an amicable settlement with Bank of New York Mellon to resolve allegations outlined in the lawsuit without success, but the court's decision validates our efforts to remedy the bank's failure to follow our instructions to be fiscally conservative with all of our funds and investments."

In the lawsuit, The Salvation Army alleges that BNY assured the nonprofit that it would "invest and maintain the Army's funds in conservative assets with low risk and high liquidity." This was an agreed-upon strategy consistent with the Army's guiding principle of "safety first" to ensure protection and growth of funds.  Despite its assurances, BNY purchased highly volatile securities for the organization's account, including "asset-backed securities derived from sub-prime and other low quality mortgages and home equity loans." Further, the bank failed to properly manage and protect the portfolio of The Salvation Army "as market conditions deteriorated."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,750.54 +289.22 1.76%
S&P 500 1,956.60 +29.49 1.53%
NASDAQ 4,464.1870 +81.34 1.86%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs