Disgruntled investors have hit Mellon Bank with another lawsuit alleging that trust customers are being charged exorbitant fees.
A class-action suit filed in the U.S. District Court for the Eastern District of Pennsylvania alleges that Mellon's "sweep fee" violates federal banking and securities laws.
Like many banks, Pittsburgh-based Mellon charges trust customers for sweeping idle cash into interest-bearing accounts, such as money market deposit accounts.
A federal appeals court recently overturned an earlier ruling that Mellon had overcharged customers. That case alleged violations of state banking laws.
The current suit "is a different complaint, alleging a federal course of action," said C. Oliver Burt 3d, a partner with Chimicles Burt Jacobsen & McNew in Haverford, Pa.
The suit contends that Mellon violates state and federal laws that allow reasonable fees for sweep services. The fees are "unreasonable, unjustifiable, and unlawful," the complaint charges.
Mellon maintains that its sweep fees, at 50 cents a year per $100 invested, are legal and competitive with others charged by banks.
The lawsuit "is without merit, and we will be looking at all our options to resist and defend the case," said Stephen Yoder, assistant general counsel for Mellon.
The Mellon suit probably won't go forward until a similar case against CoreStates Bank is decided, said Sarah A. Miller, senior counsel for the American Bankers Association.
