Bank of New York Mellon Corp.'s Brazilian unit continues to face litigation over its administration of public pension funds, according to the bank's 2017 Form 10-K, filed Feb. 28.
The unit, BNY Mellon Servicos Financeiros DTVM SA, is the administrator of a public pension fund for postal workers called Postalis-Instituto de Seguridade Social dos Correios e Telegrafos. Beginning in 2014, Postalis has filed several lawsuits against DTVM for losses related to an investment fund in its role as fund administrator. On Jan. 16, the Brazilian Federal Prosecutor's Office also filed a civil lawsuit against DTVM alleging liability for Postalis losses based on alleged failures by DTVM to properly perform certain duties while acting as administrator and/or manager to certain funds in which Postalis invested. The lawsuit was filed in São Paulo.
BNY Mellon said the aggregate range of reasonably possible losses is up to $840 million in excess of accrued liability.
The bank also said the new accounting guidance for recording revenue from customer contracts will reduce after-tax retained earnings by $55 million. The bank adopted the guidance at the beginning of the year and used the cumulative effect transition method; it is still developing the required disclosures about revenue and contract costs and finalizing changes to internal controls.
