BNY Mellon (BK) Enters Settlement Related to Sigma Finance Litigation; to Record $210M Post-Tax Charge
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BNY Mellon (NYSE: BK) announced that on July 5, 2012 it entered into a settlement agreement related to a previously disclosed class action lawsuit pending in federal court in Oklahoma and initiated by CompSource Oklahoma concerning losses in connection with the investment of securities lending collateral in Sigma Finance Inc. ("Sigma"). The settlement agreement is subject to court approval.
The company recorded an after-tax charge in the second quarter of 2012 of approximately $210 million ($350 million pre-tax) primarily related to claims involving Sigma investments. This charge includes in part the expected payment of $280 million settling the Sigma-related class action.
Separately, the company noted that, after a preliminary review of the recently released Basel III rulemaking, it estimates that the impact of the new rules will be to increase its Basel III Tier 1 common equity ratio by over 100 basis points. The Basel III Tier 1 common equity ratio as of March 31, 2012 was 7.6%. The expected increase is primarily due to the estimated reduction in risk-weighted assets related to the company's securities portfolio.
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The company recorded an after-tax charge in the second quarter of 2012 of approximately $210 million ($350 million pre-tax) primarily related to claims involving Sigma investments. This charge includes in part the expected payment of $280 million settling the Sigma-related class action.
Separately, the company noted that, after a preliminary review of the recently released Basel III rulemaking, it estimates that the impact of the new rules will be to increase its Basel III Tier 1 common equity ratio by over 100 basis points. The Basel III Tier 1 common equity ratio as of March 31, 2012 was 7.6%. The expected increase is primarily due to the estimated reduction in risk-weighted assets related to the company's securities portfolio.
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