Bank Of New York Mellon Corp current report, 19 March 2015

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Business Context and Reporting Period

Company: The Bank of New York Mellon Corporation (BNY Mellon)
Filing Type: Form 8-K (Current Report)
Date of Report: March 19, 2015
Event: Resolution of substantially all pending foreign exchange (FX)-related legal actions.

Key Financial Metrics

Total Settlement Payments: $714 million
Funding Source: Fully covered by preexisting reserves.
Breakdown of Payments:

  • U.S. Department of Justice (DOJ): $167.5 million
  • New York Attorney General (NYAG): $167.5 million
  • Customer Class Actions: $335 million (subject to court approval)
  • U.S. Department of Labor (DOL): $14 million
  • Securities and Exchange Commission (SEC): $30 million penalty (settlement in principle, subject to Commission approval)

Other Metrics: The filing does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity for the reporting period.

Material Changes

The primary material change is the resolution of lawsuits filed in October 2011 by the DOJ and NYAG regarding "standing instruction" FX transactions provided to custody clients prior to early 2012. Additionally, settlements were reached with plaintiffs in customer class actions, the DOL, and the SEC regarding similar matters.

Outlook, Risks, and Contingencies

Contingencies:

  • The $335 million class action settlement is subject to court approval.
  • The $30 million SEC penalty is subject to approval by the Commission.
Management Commentary: The Company announced that the settlements fully resolve the DOJ and NYAG lawsuits. As part of the DOJ and NYAG settlements, the Company will provide functionality allowing customers to compare pricing for "defined spread" and "session range" standing instruction FX products.
Risks: The filing includes standard forward-looking statement disclaimers, noting that results may differ materially due to risks and uncertainties beyond the Company's control, as detailed in the 2014 Form 10-K.

Investor Verification Checklist

  • Verify the impact of the $714 million settlement on the Company's balance sheet, noting the claim that it is fully covered by preexisting reserves.
  • Monitor the status of court approval for the $335 million class action settlement.
  • Confirm the final approval of the $30 million SEC penalty by the Commission.
  • Review the specific terms of the new pricing comparison functionality required for customers under the DOJ and NYAG settlements.