Officials at Northern Trust Corp. said the company received a subpoena from the Securities and Exchange Commission this month related to the company's securities lending.
“Northern Trust will fully cooperate with the SEC in this investigation,” the company said Monday in a regulatory filing disclosing the subpoena.
Northern Trust previously disclosed it was sued by a number of customers of its securities lending program, according to the filing. The clients claimed Northern Trust mismanaged collateral posted by borrowers of the securities, causing losses for the lenders, the company said.
The company recorded a $19.2 million expense in the fourth quarter to settle two of the lawsuits and, as of March 31, estimated the upper end of its aggregate legal liability for “a limited number of the matters” to be $130 million.
“We believe the securities lending practices under review are appropriate,” Doug Holt, a spokesman for Northern Trust, said in an e-mail.
Mr. Holt said the company regularly advises shareholders on matters of legal liability and the $130 million isn't tied exclusively to the securities lending claims.
The lawsuits “assert various contractual, statutory and common law claims, including claims for breach of fiduciary duty under common law and under the Employee Retirement Income Security Act,” the company said in Monday's filing.
