Northern Trust Co. and Northern Trust Investments have countersued the BP Corp. North America Inc. savings plans investment oversight committees over alleged securities-lending losses in index funds, accusing the committees of possibly violating ERISA and seeking counterdamages.
The countersuit, filed earlier this month, was the latest salvo in the dispute between the two parties. In October, the BP committees sued Northern Trust, claiming it had mismanaged four index funds available to employees participating in BP's savings plan that engaged in securities lending, and is seeking unspecified damages.
If the allegations in the lawsuit BP filed against Northern Trust in October “are true, (the committees) failed to fulfill the fiduciary duties that they owed to the BP plans,” according to the countersuit by Northern Trust.
“Assuming that any of these allegations is found to be true in this case” — which Northern Trust denies in its filing — “the plan committees' alleged failure to obtain and understand (securities lending) information before making the subject investments or selecting them as an investment option … constituted a primary and active breach of trust and fiduciary duty by the plan committees” and are “substantially more at fault than NTI or NTC for any alleged losses to the BP plans. Such an alleged failure by the plan committees would amount to inadequate due diligence and … would violate the plan committees' duties under ERISA."
“If the BP plans are somehow able to establish that investing in securities-lending funds was imprudent, then … the BP plans must share in that liability since they made the decision to participate in securities lending,” Northern Trust said in a statement about its countersuit.
Gregory T. Williamson, director of trust investments, the Americas, BP America Inc., Warrenville, Ill., declined to comment on the litigation. BP's U.S. defined contribution plans have $8 billion in assets.
The dispute is pending before Judge William J. Hibbler in U.S. District Court in Chicago.