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BNY Mellon fined $6.6m for miscalculating RWAs
12 January 2017
Custodian bank excluded aorund $14bn in collateralized loan obligation assets from its calculations
collateralized loan obligation
BNY Mellon will pay a $6.6m penalty to the SEC over charges
the US custodian bank miscalculated its risk-based capital
ratios and risk-weighted assets reported to investors.
An investigation by the SEC found that BNY Mellon deviated
from regulatory capital rules by excluding approximately $14bn
in collateralized loan obligation assets from its calculations
that the firm consolidated onto its balance sheet in
The bank failed to obtained Federal Reserve Board approval,
as required under regulatory capital rules, to exclude the
assets from its calculations.
Due to the errors, the SEC claims BNY Mellon understated its
risk-weighted assets and overstated certain risk-based capital
ratios in quarterly and annual reports from the third quarter
of 2010 to the first quarter of 2014.
"Regulatory capital ratios and risk-weighted assets are
critical data points for investors in large banking
institutions like BNY Mellon," said Michael J. Osnato, chief of
the SEC enforcement division’s complex financial
"We will continue to aggressively focus on these kinds of
disclosures to ensure that control failures do not prevent
investors from receiving accurate and timely information."
Without admitting or denying the charges, BNY Mellon
consented to an SEC order finding that it violated internal
controls and recordkeeping provisions.