Argentina said on Tuesday it has stripped Bank of New York Mellon’s authorization to operate in the country, its latest move against the bank, which blocked an Argentine government debt payment on the orders of a U.S. court.
BNY Mellon, a financial intermediary between the Argentine government and its bondholders, has been caught up in a bitter legal battle between U.S. investment funds and the South American country, which in July defaulted for the second time in 12 years.
Argentina’s Congress is due on Wednesday to discuss a law that would replace BNY Mellon as intermediary for payments on foreign law bonds with state-controlled bank Banco Nacion, as part of a new debt restructuring plan.
The central bank “has revoked BNY’s authorization for representation in Argentina,” Cabinet Chief Jorge Capitanich said in his daily briefing. The authorization applied specifically to two BNY Mellon officials.
A group of hedge funds holding EUR1.3 billion ($1.71 billion) of Argentine government bonds has filed suit against the U.S. bank charged with overseeing payments to the nation’s bond investors, seeking to gain access to interest payments they are owed.
The suit, filed in London’s Chancery Court, names as defendant Bank of New York Mellon Corp. The suit opens up a new front in the decadelong war between Argentina and investors including so-called holdout creditors that are seeking payment on bonds the country defaulted on in 2001.
The plaintiffs include Knighthead Master Fund LP, RGY International LLC, which is a unit of Perry Capital, as well as Kyle Bass’s Hayman Capital Master Fund LP and George Soros’s Quantum Partners LP, according to a copy of the suit.
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Judge OKs Salvation Army lawsuit vs BNY Mellon
NEW YORK, Jan 28 (Reuters) – A judge refused to throw out a lawsuit accusing Bank of New York Mellon of mismanaging The Salvation Army assets by investing nearly $22 million of the charity’s funds in mortgage-backed securities and other risky investments.
The Salvation Army, one of the largest U.S. charities, claims in its lawsuit that the bank didn’t abide by its obligation to invest in conservative assets and failed to take steps to protect the charity as market conditions deteriorated.
The charity, which filed the lawsuit in 2011 in New York State Supreme Court, is seeking damages for breach of fiduciary duty and other claims.
The Salvation Army must only “state a claim at this juncture, not prove it,” Justice Barbara Kapnick wrote in her Jan. 25 decision denying the bank’s motion to dismiss the breach of fiduciary duty claim.
Kapnick also let stand breach of contract and gross negligence claims. She dismissed a claim for negligent misrepresentation.
The judge noted the Salvation Army’s claim that the bank invested the charities’ funds in high-risk securities despite reducing its own exposure to such investments.
The bank said it abided by its securities lending agreement with The Salvation Army, according to the judge’s ruling. It urged the court to consider the entire investment portfolio which, the bank said, did well.