BNY Mellon Faces SEC Probe over SWF Interns

The US regulator wants to know more about BNY Mellon’s hiring of potential clients’ staff.

The Securities and Exchange Commission (SEC) has recommended disciplinary action against one of the world’s largest custodian banks and asset managers for alleged violations of the US Foreign Corrupt Practices Act.

BNY Mellon noted in an 8-K filing to the government agency this month that it had received a Wells notice “in connection with the provision of a limited number of internships to relatives of sovereign wealth fund officials” in the third quarter of last year.

“In the third quarter of 2014, the SEC Staff issued Wells notices to certain current and former employees of BNY Mellon, informing them that the SEC Staff has made a preliminary determination to recommend enforcement action against them for alleged violations of the US Foreign Corrupt Practices Act in connection with the provision of a limited number of internships to relatives of sovereign wealth fund officials,” the filing said.

BNY Mellon said it had received “a similar notice” during the last three months of 2014 after being first alerted to the enquiry more than four years earlier.

“In January 2011, the Enforcement Division of the US SEC informed several financial institutions, including BNY Mellon, that it had commenced an inquiry into certain of their business practices and relationships with sovereign wealth fund clients,” the company’s 8-K filing said.

“BNY Mellon has fully cooperated with the SEC staff’s investigation,” the company said, adding that although it was “not possible to predict the ultimate resolution or financial liability with respect to this matter, BNY Mellon is currently of the opinion that the outcome of this matter will not have a material effect on BNY Mellon’s business, financial condition or results of operations”.

A Wells notice is neither a formal allegation of wrongdoing nor a finding that the company violated any law.  Rather, it provides BNY Mellon an opportunity to respond to issues raised by the SEC staff and offer its perspective prior to any SEC decision.

BNY Mellon declined to comment. 

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