Thursday, The Bank of New York Mellon Corp. (BK) announced that it has reached an agreement with the Federal Customs Service of the Russian Federation whereby the Federal Customs Service would withdraw a litigation petition against the bank in the Moscow City Arbitration Court seeking $22.5 billion in damages.
Under the terms of the agreement, the bank will pay US$14 million as a compensation of trial costs, an amount equal to the amount paid by the bank to the U.S. government in 2005 under a non-prosecution agreement with the US Attorney's Office.
The litigation was filed in May 2007, and the US$22.5 billion claim was based on the actions of the bank's ex-employee Lucy Edwards, who from 1996 to 1999 participated in illegal banking operations concealing it from the bank. In November 2005, the bank and the US Attorney's Offices signed a non-prosecution agreement in which the bank agreed to pay US$14 million to the U.S. Government.
Further, the Attorney's Office, in a statement dated July 29, confirmed that the bank was not charged with any criminal violation arising out of the investigation conducted by the US Attorney's Office for Southern District of New York.
Based on the Attorney's Office report, the Federal Customs Service of the Russian Federation voluntarily withdrew its claim against The Bank of New York Mellon. Following a voluntary withdrawal of the Federal Customs Service's claim against the bank, proceedings in the Moscow City Arbitration court have now been terminated and both parties have concurrently reached an out-of-court settlement agreement.
BK is currently trading at $29.05, up $0.99 or 3.53% on the NYSE.
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