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BNY Mellon Still Having Problems With Fund Pricing System

Image: BNY Mellon Still Having Problems With Fund Pricing System
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Thursday, 27 Aug 2015 12:35 PM

BNY Mellon Corp. was still trying to resolve problems with a computer system used to calculate the prices of mutual funds and exchange-traded funds on Thursday, prolonging confusion over the price of recent trades and any potential compensation owed.

Fund managers rely on BNY Mellon to calculate the net asset value or NAVS of their funds but a failed software upgrade over the weekend floored its system just as investors were heading into a tumultuous week of trading sparked by fears about the Chinese economy..

The breakdown means investors may have bought or sold mutual funds at inaccurate prices and they could be entitled to compensation if they made a loss on a trade because of the inaccuracies.

"The system is up although some performance issues remain," BNY Mellon spokesman Kevin Heine said on Thursday.

The system, run by financial software provider SunGard, resumed with limited capacity on Tuesday leaving BNY Mellon with a backlog of funds to price.

SunGard, which is being bought by rival software provider Fidelity National Information Services, did not return messages seeking comment.

Fund executives and accountants were scurrying to figure out which of their funds were affected, officials told Reuters.

Federated Investors is reprocessing trades for the five funds that had incorrect NAVs as a result of the glitch, a spokeswoman said. The Pittsburgh-based fund company will compensate investors for any losses if there were any, she said.

In general fund companies that do have to compensate investors expect that Bank of New York Mellon will pay them back, said one attorney who has fund companies affected by the glitch.

"Their reputation is on the line," the attorney said.

BNY Mellon started notifying fund executives mid-day Monday that there could be an error with NAVs, but that they expected the issue to be resolved by market close, said the attorney and a fund official familiar with the situation, who wished to remain anonymous because they are not permitted to speak to the media.

Bank of New York called them later in the day to tell them they would not be able to provide NAVs by market close.

"That's when people started flipping out," the attorney said.

It is unclear if there will be litigation as a result of the glitch, the attorney said. "It depends on what kind of losses you will see," the attorney said. "Hopefully losses will be minimal and BNY will step up."

© 2017 Thomson/Reuters. All rights reserved.

 
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BNY Mellon Corp. was still trying to resolve problems with a computer system used to calculate the prices of mutual funds and exchange-traded funds on Thursday, prolonging confusion over the price of recent trades and any potential compensation owed.
Bank of New York, BNY Mellon, fund, pricing
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2015-35-27
Thursday, 27 Aug 2015 12:35 PM
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