Bank of New York Mellon Chief Executive Officer Gerald L. Hassell and other officers and directors won dismissal of a lawsuit seeking to hold them responsible for alleged misrepresentations about currency-trading prices.
Shareholders who filed the suit failed to show the executives knew of wrongful acts, U.S. District Judge Lewis Kaplan said in a decision today in Manhattan federal court. The judge also said the plaintiffs didn't ask the board to address the issue before filing a case, as the law requires.
"There are no alleged 'red flags' that could permit the conclusion that the board was grossly negligent in failing to learn how the company was representing its services," Kaplan wrote.
Separately, the U.S. government and New York State sued the bank in 2011 alleging it defrauded foreign currency trading clients by misrepresenting pricing practices. The alleged scheme affected thousands of clients, including pension funds and federally-insured financial institutions, they said.
The suit is pending.
In the shareholder lawsuit, the bank's officers and directors faced claims of breach of fiduciary duty, corporate waste and unjust enrichment, Kaplan said.
Brian Robbins, a lawyer for the shareholders, did not immediately return a call seeking comment on the ruling.
"We are pleased with the court's decision," said Kevin Heine, a spokesman for the New York-based bank.
The case is In Re Bank of New York Mellon Corp. Forex Transactions Litigation, 1:11-cv-8471, U.S. District Court, Southern District of New York (Manhattan).