Second Circuit Issues Important Decision For RMBS Trustees

Keywords: RMBS trustees, BNYM, Trust Indenture Act, TIA

As has been widely reported in corporate trust circles, just before Christmas, the Second Circuit issued an important decision for RMBS trustees. In Retirement Board of the Policemen's Annuity and Benefit Fund v. The Bank of New York Mellon, certain pension funds that invested in RMBS trusts filed suit against The Bank of New York Mellon (BNYM), as trustee of those trusts, asserting that it breached obligations under the common law and the federal Trust Indenture Act (TIA). Although the pension funds held investments in only 25 trusts for which BNYM serves as trustee, they purported to represent a class asserting claims concerning 534 trusts. After the district court ruled that the funds lack standing to assert claims involving the more than 500 trusts in which they did not invest, and also denied BNYM's motion to dismiss the TIA claims as to PSA-governed trusts, the court certified its order for an