PITTSBURGH -- Mellon Bank Corp. said it filed a suit against Primerica Inc.. American Express Co., and their brokerage arms for allegedly violating Mellon's contract to buy Boston Co.
Mellon said that after it purchased Boston Co. from American Express' Shearson Lehman Brothers early this year, neither Shearson nor its affiliates were to provide custodial or administrative services to any mutual fund for which Shearson or any of its subsidiaries served as investment adviser, underwriter, or placement agent. Shearson and its subsidiaries were to recommend Boston Co. for custody and administrative services for all Shearson mutual funds, according to the suit filed in U.S. District Court for the Western District of Pennsylvania.
Mellon said Primerica's Smith Barney unit, which acquired Shearson in August, has "willfully violated" the Shearson-Mellon contact. Among other actions alleged, Smith Barney created mutual funds that are "virtual clones" of Shearson funds serviced by Boston Co., and merged Shearson funds into Smith Barney funds not serviced by Boston Co.
Primerica and Smith Barney dismissed the lawsuit as "factually incorrect. We believe it is without merit. Our interest is in providing quality service at reasonable costs to investors in our mutual funds."