SEC to investigate Northern Trust over securities lending

SEC Building

Northern Trust said it received a subpoena from the U.S. Securities and Exchange Commission in April related to the bank’s securities lending activities.

“Northern Trust will fully cooperate with the SEC in this investigation,” the company said today in a regulatory filing that disclosed the subpoena.

Bloomberg News reports that Northern Trust has previously disclosed that 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 $19.2m expense in the fourth quarter of 2013 to settle two of the lawsuits and as of March 31 had estimated the upper end of its aggregate legal liability for 'a limited number of the matters' to be $130m. Northern Trust didn’t specify whether the entire amount was connected to securities lending litigation.

To access the complete Bloomberg article hit the link below:

Northern Trust Reports SEC Subpoena on Securities Lending

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