Minami Tamaki LLP and co-counsel recently filed a lawsuit against Bank of New York Mellon (BNY Mellon) claiming that the bank invests trust assets in a manner that benefits the bank rather than acting in the best interests of the trust beneficiaries, which they are legally required to do.
BNY Mellon tried to get the case thrown out, but a federal judge last week denied the bank’s request and is allowing the case to proceed.
Our lawsuit alleges that BNY Mellon, acting as a trustee, had complete control over the trust assets and improperly invested the vast majority of those trust assets in their own proprietary investments. When given a choice of how to invest trust assets, BNY Mellon chose their own investments, allowing the bank to obtain additional fees and benefits.
These trusts are generally not well-supervised by the beneficiaries and are ripe for abuse. Filing this lawsuit is one way we can hold banks accountable for managing customers’ assets.
Under the law, trustees such as BNY Mellon owe trust beneficiaries the highest duty of loyalty and must always put the interests of their clients over their own self-interest. The lawsuit alleges that BNY Mellon did not meet that duty of loyalty.
Minami Tamaki’s Consumer & Employee Rights Group litigates class actions and individual cases on behalf of consumers, investors, and employees who have been harmed by illegal or unfair business or employment practices. Our attorneys have a sterling record of success representing millions of individuals in class action and individual cases. We have recovered hundreds of millions of dollars for our clients and aggrieved class members.
On November 23, 2015, Chief Judge Patti B. Saris of the U. S. District Court, District of Massachusetts, issued an opinion denying the motion to dismiss, rejecting BNY Mellon’s argument that the lawsuit should be dismissed because the Securities Litigation Uniform Standards Act limits the rights of shareholders to bring class actions. In the past, the major Wall Street banks have abused this law to prevent trust beneficiaries from suing to prevent these conflicts of interest.
Judge Saris’ decision is one of the first decisions in the country to interpret the impact of last year’s United States Supreme Court decision in Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058 (2014) in the context of trust law and breaches of fiduciary duty.
The Chadbourne opinion provides trust beneficiaries who have suffered harm due to the conflict of interest of their trustee to file a lawsuit to recover their losses as well as to prevent bank trustees from continuing to engage in such practices.
Our firm believes that this is a common practice in the industry. Anyone who is a beneficiary of a trust and who does not believe that the bank trustee is acting in their best interests should contact Aron Liang at firstname.lastname@example.org or call 415-788-9000.