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Bank of N.Y. Shrugs Off Suit

It suggests it has faced threats tied to the Russian money laundering claim.

Bank of New York

(BK) - Get Bank of New York Mellon Corporation Report

brushed off a big Russian state money laundering lawsuit and hinted at extortion threats tied to the case.

Russia's Federal Customs Service sued the Bank Thursday, seeking $22.5 billion in damages,

Reuters

reported. The allegations stem from a late 1990s money laundering case involving a former Bank of New York employee and her husband.

Reuters

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said details of the suit, such as where it was filed, weren't clear.

Lucy Edwards, a former vice president who worked out of the bank's London office, and her husband, Peter Berlin, pleaded guilty in 1999 to money laundering through the bank for several Russian companies. The two paid a fine and were sentenced to six months of house arrest.

Bank of New York agreed to pay a $26 million fine and $12 million to other institutions that might have lost money in the scheme, according to reports.

"While we have not seen the complaint, based on our knowledge of the facts, we believe any such suit would be totally without merit, if not frivolous, and we would expect to defend it rigorously," Bank of New York said in a statement on Thursday.

Bank of New York added that it was previously approached by lawyers "purporting to represent this agency, who claimed to be able to dispose of the matter for a tiny fraction of the amount now claimed."

Shares fell 1% in heavy volume. But Dick Bove, an analyst at Punk Ziegel who rates the stock buy, says investors should not be spooked.

"It would be a mistake to sell Bank of New York based on this event," he writes. "If the stock is heavily pressured I would buy it. No one knows where this suit is going and no one will know what the resolution will be until years into the future."