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January 29, 2013

Salvation Army Suit Against BNY Mellon Cleared for Trial

A New York judge has refused to dismiss a lawsuit that accuses Bank of New York Mellon of mismanaging tens of millions of dollars in Salvation Army assets, says Reuters.

The relief organization alleges that BNY Mellon breached its fiduciary duty by putting some $22-million in Salvation Army funds into mortgage-backed securities and other risky vehicles. The bank sought dismissal of the 2011 suit, saying it had abided by its securities agreements with the charity.

Ruling Friday, New York State Supreme Court Justice Barbara Kapnick said the Salvation Army must only "state a claim at this juncture, not prove it," and noted the charity's assertion that the bank reduced its own exposure to high-risk securities while investing the charity's money in them.