BNY Mellon agrees to pay Massachusetts $3 million over computer glitch

A Massachusetts Securities Division investigation says the firm failed to calculate net asset values on more than 1,000 funds.
FEB 29, 2016
The Bank of New York Mellon agreed to pay $3 million to Massachusetts after an investigation found a computer glitch on the firm's part failed to calculate net asset values for more than 1,000 mutual funds, according to commonwealth officials. BNY Mellon hired a third-party vendor, Pennsylvania subcontractor SunGard InvestOne, to calculate net asset values, but during a weekend in August last year, there was a malfunction because of a system upgrade. A probe by the Massachusetts Securities Division discovered that BNY Mellon did not have a backup plan, which resulted in untimely and non-uniform information being sent to funds and clients, according to officials. Financial institutions like BNY Mellon are expected to oversee their third-party vendors and have backup plans if the vendor's system fails,” Secretary of the Commonwealth William F. Galvin said in a statement. “This is particularly important when the third-party vendor performs a critical business function that impacts mom and pop investors.” “While we truly regret any confusion our clients may have experienced during the initial hours of the outage, the fact remains that BNY Mellon took decisive action during an unprecedented vendor failure to protect our clients' interests and deliver daily net asset values to the funds in accordance with their instructions,” said Kevin Heine, a BNY Mellon spokesman. He also said the firm did produce net asset values manually. BNY Mellon has since incorporated supervisory procedure changes, and has made whole any funds or investors who suffered losses.

Latest News

Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up
Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up

Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.

UBS loses $1.2 million arbitration claim linked to variable annuities and margin
UBS loses $1.2 million arbitration claim linked to variable annuities and margin

UBS has a history of costly litigation stemming from the sale of volatile investment products.

'We are monitoring the situation,' SEC says of private funds
'We are monitoring the situation,' SEC says of private funds

New director David Woodcock puts firms on notice over fees, conflicts, and liquidity risk as private credit shows signs of stress.

Separating math from emotion key to a successful retirement, says JPMorgan
Separating math from emotion key to a successful retirement, says JPMorgan

Advisors can help “separate the math from the emotion” when it comes to retirement, says JPMorgan’s Michael Conrath.

Nitrogen launches Legacy Center to close generational wealth transfer gap
Nitrogen launches Legacy Center to close generational wealth transfer gap

New product gives advisors a structured way to introduce themselves to clients' heirs before assets change hands.

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline

SPONSORED The barbell era: How ultra-wealthy investors are positioning for what comes next

Ultra-high-net-worth investors aren’t retreating from risk. They're redefining it, balancing safety with selective conviction