A New York federal judge told Bank of New York Mellon Corp, as a trustee of Belgian investment fund, failed to protect some $1.12 billion in residential mortgage-backed securities.
Belgian investment fund has a claim over Bank of New York Mellon Corp. for failure of the latter, as a trustee, to protect some $1.12 billion in residential mortgage-backed securities.
U.S. District Judge Gregory H. Woods of the federal district court in Manhattan said that Royal Park Investments SA/NV had provided substantive evidence that Bank of New York Mellon did not sufficiently protect investors in the securities.
Moreover, Bank of New York Mellon Corp. shown widespread, systemic abuse in how the underlying loans were underwritten and serviced, and failed to require that bad loans be repurchased.
Judge Woods stated "It would be implausible to assume that somehow all of the mortgage loans underlying the trusts miraculously avoided the pervasive practices of the industry at the time."
The judge also told the bank violated some provisions of Trust Indenture Act of 1939.
Royal Park alleged their reputation has been besmirched due to the overseen acts of the bank towards its five residential mortgage-backed securities.
Under Section 302(a) of Trust Indenture Act of 1939, a person or entity is liable when it fails to provide a trustee to protect and enforce the rights and to represent the interests of such investors notwithstanding the fact that:
a. Individual action by such investors for the purpose of protecting and enforcing their rights is rendered impracticable by reason of disproportionate expense taking such action; and
b. Concerted action by such investors in their common interest through representatives of their own selection is impeded by reason of the wide dispersion of such investors through many States and by reason of the fact that information as to the names and addresses of such investors generally is not available to such investors.
The case is Royal Park Investments SA/NV v. Bank of New York Mellon, U.S. District Court, Southern District of New York, No. 14-06502.
