The Knights of Columbus is suing Bank of New York Mellon, saying the bank damaged its investment in mortgage-backed securities.
The charitable organization seeks to recover losses and demands punitive damages from the bank, according to an amended complaint filed Tuesday in New York state court in Manhattan.
Bank of New York, which serves as trustee for trusts holding loans underlying mortgage securities, mismanaged the trust assets, the Knights of Columbus said in a statement. It accused the bank of gross negligence and recklessness and said the bank's actions caused a “substantial” loss, according to the complaint.
“It is apparent that the defendant knowingly failed in its obligation to receive, process, maintain, and hold all or part of the mortgage files,” Knights of Columbus said. As a result, it didn't acquire mortgage-backed securities, “but instead acquired securities backed by nothing at all,” the organization said.
Kevin Heine, a spokesman for Bank of New York Mellon, said the complaint “is without merit.”
“We are confident we have fulfilled our responsibilities as trustee,” he said.
Knights of Columbus first sued Bank of New York Mellon in May seeking an accounting of two mortgage-securitization trusts to obtain details about Bank of America's foreclosure practices and learn whether investors are entitled to recover damages. Bank of America acts as servicer for the loans, collecting payments and conducting foreclosures, according to court papers.