Northern Trust Securities Lending Litigation

Court: United State District Court, Northern District of Illinois
Case Number: 09-7203
Case Contacts: Gerald H. Silk, David Wales, Avi Josefson, Michael D. Blatchley

This is a class action filed on behalf of all participants in the securities lending program operated by Northern Trust.

Settlement of “Indirect Lending” Claims Achieved

The parties to the above-noted action reached a partial settlement of the action (the “Settlement”), set forth in the Stipulation and Agreement of Partial Settlement of Class Action dated February 17, 2015 (the “Stipulation”).  Pursuant to the Settlement, defendants Northern Trust Investments, N.A. (currently, Northern Trust Investments, Inc.) and The Northern Trust Company (collectively “Northern Trust” or “Defendants”) have paid a total of $24,000,000 in cash for the resolution of all claims asserted in the action with respect to Indirect Lending, which is defined as participation in or exposure to Northern Trust’s securities lending program through the purchase and/or holding of units or interests in Northern Trust’s “Commingled Lending Funds” which engaged in securities lending.  For more information about the Settlement, including a list of the Commingled Lending Funds, visit

Final Court Approval of Settlement

A Settlement Hearing was held on August 5, 2015 to determine, among other things, whether the Settlement should be approved.  On August 7, 2015, the Court entered a Final Judgment approving the Settlement, an order approving the Plan of Allocation, and an order awarding attorneys' fees and expenses.

Who is Included in the Settlement Class

The entities included in the Settlement Class that was finally certified by the Court for settlement purposes are:

All entities that are not governed by ERISA and that participated in Indirect Lending during the Settlement Class Period (i.e., the period beginning January 1, 2007 through and including October 31, 2010) and are alleged to have been damaged as a result of their participation in Indirect Lending at issue in the Action.

As set forth in the Stipulation, certain entities are excluded from the Settlement Class by definition.

PLEASE NOTE:  There is a related action styled Diebold v. Northern Trust Investments, N.A. (the “Diebold Action”) that was brought on behalf of entities that are subject to the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”).  Those entities ARE NOT included in the Settlement Class in this action. Information about the Diebold Action can be found at

Detailed Notice of Settlement Mailed to Identified Settlement Class Members

On May 15, 2015, the Notice of (I) Preliminary Certification of Settlement Class, and Proposed Partial Settlement of Class Action; (II) Settlement Hearing; and (III) Motion for an Award of Attorneys’ Fees and Reimbursement of Litigation Expenses (the “Settlement Notice”) was mailed to Settlement Class Members identified by Defendants.  A copy of the Settlement Notice is available on the Case Documents page.  As set forth in the Settlement Notice, the identified Settlement Class Members do not need to submit a claim form or take any other action in order to be eligible to receive a payment from the Settlement proceeds.  Settlement Class Members should carefully review the notice to fully understand the effect of the Settlement on them.

Modification of Table A to Plan of Allocation

As stated in the Settlement Notice, the Plan of Allocation was subject to modification.  On July 29, 2015, a slightly revised version of Table A of the Plan of Allocation was submitted to the Court and is available here.  The Plan of Allocation, including the revised Table A, has been approved by the Court.


On July 16, 2010, Co-Lead Plaintiffs filed their Amended Class Action Complaint (the "Complaint"), alleging that Defendants imprudently invested client assets.  Through its securities lending program, Northern Trust loaned securities owned by its clients to borrowers in exchange for cash collateral.  However, instead of safe, conservative and highly liquid short-term investment funds, Northern Trust invested the cash collateral in high-risk and long-term securities. These improper investments, and Northern Trust's failure to prudently manage the investment funds to mitigate the excessive risks it created, resulted in significant losses, which in turn led Northern Trust to limit withdrawals from the securities lending program.

Plaintiffs' Complaint contained three counts against defendants Northern Trust Investments, N.A. and The Northern Trust Company alleging breach of fiduciary duties (Count I); breach of contract (Count II) and breach of duty of good faith and fair dealing ("Count III"). On September 3, 2010 Defendants moved to dismiss the Complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim.

On May 6, 2011, the Honorable Robert Gettleman largely denied the Defendants' motion to dismiss and sustained the Plaintiffs' complaint.  Defendants answered the Complaint on July 14, 2011, and the case is now in discovery.