By Razak Musah Baba
LONDON--The U.K Financial Conduct Authority has fined The Bank
of New York Mellon London Branch and The Bank of New York Mellon
International Ltd., 126 million pounds ($187.5 million) for
compliance failings.
The regulator, which identified most of the failings as part of
their regular review of such institutions, said the firms failed to
comply with the FCA Client Assets Sourcebook, Custody Rules, which
applies to safe custody assets and to client money.
The rules protect safe custody assets if a firm becomes
insolvent to ensure those assets can be returned to clients as
quickly and easily as possible.
"The Firms' failure to comply with our rules including their
failure to adequately record, reconcile and protect safe custody
assets was particularly serious given the systematically important
nature of the Firms and the fact that safeguarding assets is core
to their business," FCA's acting director of enforcement and market
oversight Georgina Philippou said in a statement.
The failings occurred between Nov. 1, 2007 and Aug. 12, 2013,
the regulator said.
The firms agreed to settle at an early stage of the FCA's
investigation and therefore qualified for a 30% discount. Were it
not for the discount, the financial penalty would have been GBP180
million, it added.
Responding to the fine, BNY Mellon said in a statement that fine
amount is fully covered by pre-existing legal reserves.
"Importantly, BNY Mellon remained financially robust throughout
the relevant period and, as indicated by the FCA in its Final
Notice, no clients suffered any loss as a result of the issues
identified," it said.
BNY Mellon added that following an internal review, it has taken
clear steps to put in place a framework of new and improved
policies and operational procedures.
The Bank of New York Mellon Group is the world's largest global
custody bank by safe custody assets.
Write to Razak Musah Baba at razak.baba@wsj.com; Twitter:
@Raztweet
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