Massachusetts Pension Reserves Investment Management Board, Boston, will get a $15.5 million reduction in custody fees over the next five years in a settlement with BNY Mellon Asset Servicing over allegations that the firm overcharged MassPRIM for foreign currency exchange transactions.
The settlement, announced Monday, halts plans by the board, which oversees $57 billion, to file suit against BNY Mellon over the matter and also resolves a separate administrative proceeding against the custodian by William F. Galvin, Massachusetts secretary of the commonwealth, confirmed Jon Carlisle, spokesman for Steven Grossman, Massachusetts state treasurer. Mr. Grossman is chairman of the MassPRIM board.
The fee reduction is part of an agreement to extend BNY Mellon's contract with MassPRIM as global custodian through June 2019, with the potential to extend the contract beyond that month, said Kevin Heine, spokesman for BNY Mellon. Cosmo Macero Jr., spokesman for MassPRIM, confirmed the agreement.
“We are pleased to reach this contractual agreement with PRIM, which allows us to continue our longstanding relationship with them,” Mr. Heine said.
The agreement calls for BNY Mellon to reimburse MassPRIM the $15.5 million through a 64% discount on custody services. BNY Mellon also will reimburse the board $100,000 for legal fees, according to a news release from Mr. Grossman.