Class action filed on behalf of all participants in the securities lending program operated by Northern Trust.
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.
