Bank of New York Mellon will pay £126 million ($188 million) in a settlement with the U.K.’s Financial Conduct Authority for violations of the agency’s custody rules regarding the custodian’s records.
The settlement was 30% less than the £180 million financial penalty that the FCA would have assessed because the agreement was reached “at an early stage of the FCA’s investigation,” the agency said in a news release Wednesday.
The FCA said Bank of New York Mellon’s London branch and Bank of New York Mellon International failed “to adequately record, reconcile and protect safe custody assets,” Georgina Philippou, acting FCA director of enforcement and market oversight, said in the news release. “Had the firms become insolvent, the total value of safe custody assets at risk would have been significant. This is compounded by the fact that the breaches took place at a time when there was considerable stress in the market.”
No clients sustained any losses as a result of the violations.
The FCA said the violations of its custody rules occurred from November 2007 to mid-August 2013, and were discovered during a regular review by the FCA.
BNY Mellon said the companies have implemented new policies and operational procedures to comply with FCA custody rules. BNY Mellon International is Bank of New York Mellon’s U.K.-based subsidiary; the London office is a branch of BNY Mellon’s New York-based bank, said Kevin Heine, BNY Mellon spokesman. He said the company had no comment beyond the news release.