Massachusetts regulator investigates BNY Mellon fund pricing snafu

September 4, 2015 12:27 PM EDT

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By Ross Kerber and Tim McLaughlin

BOSTON (Reuters) - The top securities regulator of Massachusetts said on Friday he is investigating the computer glitch at BNY Mellon Corp (NYSE: BK) that last month disrupted pricing on more than $400 billion worth of mutual fund and exchange-traded fund assets.

Secretary of the Commonwealth William Galvin said he has asked BNY Mellon and six of the largest fund companies affected how the technical glitch in fund accounting impacted individual investors.

β€œIn the warp-speed of trading these days computer problems can happen,” Galvin said in a press release. "But the fallout that seems only to affect large financial institutions can hit the average investor looking at his and her retirement money.”

BNY Mellon roiled about 5 percent of the U.S. fund industry last month when one of the accounting systems it relies on to generate prices for mutual funds and exchange-traded funds collapsed. The problems lasted a week, but the root cause has not been determined. BNY Mellon declined to comment on Galvin's investigation.

Galvin said his inquiry was initially focused on Goldman Sachs, Deutsche Bank, First Trust Advisors, Guggenheim Investments, Prudential Investments and Federated Investors Inc.

Goldman Sachs, Guggenheim and Deutsche declined to comment. Prudential, Federated and First Trust did not immediately respond to requests for comment.

The investigation asks that BNY Mellon and the investment companies detail the scope of the problem and type of corrective action that is being taken to address individual

investor harm, according to the press release from Galvin's office.

(Reporting By Tim McLaughlin, Editing by Franklin Paul and Tom Brown)

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