FED Announces fine against Bank of NY Mellon

On Tuesday, June 27, 2017, the Federal Reserve Board announced a $3 million fine against Bank of New York Mellon Corporation (BNY Mellon) for unsafe and unsound practices after the firm improperly assigned a lower risk weighting to a portfolio of assets, reducing the firm's risk-based capital ratios.

In 2010, following a change in the relevant accounting rules, BNY Mellon consolidated a portfolio of collateralized loan obligations onto its balance sheet. BNY Mellon incorrectly assigned the assets a zero-risk weighting, which was improper under the rules in place at the time. As a result of its improper treatment of the portfolio BNY Mellon understated its reported risk-weighted assets and overstated its risk-based capital ratios for nearly 14 quarters.

BNY Mellon took action to correct its risk-weighting and risk-based capital ratios when the errors were identified, and BNY Mellon is now in compliance.