BNY Mellon Wealth Management Loading Discretionary Trusts With Its Own Mutual Funds - Novick & Associates

Bank invested 81% of Mercer Trusts' assets in affiliated mutual funds and refuses to explain why

May 14, 2015, 11:25 ET from Novick & Associates, Attorneys for Mercer Sons

HUNTINGTON, N.Y., May 14, 2015 /PRNewswire/ -- As of the end of the first quarter of 2015 BNY Mellon Wealth Management (BNYMWM) had invested over eighty-one percent of the multi-million dollar Mercer trusts' liquid assets in mutual funds.  Every single one of those mutual funds was sponsored and distributed by BNY Mellon affiliated companies. 

A recent review of the bank's investment decisions since the trusts were originally funded more than five years ago revealed the same pattern. During the entire five years that BNYMWM has administered the trusts the only mutual funds it invested in were BNY Mellon affiliated mutual funds. Despite multiple requests by Howard and David Mercer, the trusts' beneficiaries, the bank has refused to explain why.

While under New York law, BNY Mellon has the right to invest discretionary trust assets in affiliated mutual funds, it does not have the right to put its own interests above the interests of trust beneficiaries, in violation of its duty of undivided loyalty to those beneficiaries.  

Not a single penny of the Mercer trusts' millions of dollars of assets was ever invested in non-affiliated BNY Mellon funds despite the fact that dozens of widely available non-affiliated mutual funds have consistently outperformed BNY Mellon affiliated funds in every fund category the trust was invested in. This is extremely troubling to Howard and David Mercer, who are the trusts' primary remainder beneficiaries.  They have insisted that BNY Mellon be held accountable for its alleged mismanagement, negligence and retaliatory conduct in its administration of the trusts established for their benefit by their father, renowned East Hampton sculptor Norman J. Mercer.

The Mercers have commenced an investigation to determine if BNY Mellon's refusal to invest discretionary trust assets under its administration in non-BNYM affiliated mutual funds is systemic in nature, and to what degree this policy may have impacted other trusts which BNY Mellon administers in a fiduciary capacity.

Donald Novick, Novick & Associates P.C.
Phone: (631) 547 0300

SOURCE Novick & Associates, Attorneys for Mercer Sons