MANHATTAN, N.Y. (Legal Newsline) -- New York Attorney General Eric Schneiderman is accusing Bank of New York Mellon Corp. of violating state law in a proposed $8.5 billion settlement between the bank and Bank of America.
Schneiderman filed the lawsuit against Bank of New York in New York State Supreme Court late Thursday, Bloomberg News reported.
The deal covers more than 500 troubled mortgage pools issued by Countrywide Financial. Bank of America bought Countrywide in 2008.
According to Bloomberg, the attorney general is accusing Bank of New York of fraud in its role as a trustee overseeing the pools for investors.
Schneiderman alleges in his lawsuit that the bank misled and breached its duties to investors.
In turn, Bank of New York should pay penalties and restitution, the attorney general argues. Schneiderman also asked a judge to reject the settlement, Bloomberg reported.
A spokesman for the bank told the news service that Schneiderman's allegations are "outrageous," "baseless" and "outrageous."
"We are confident that we have fulfilled in all respects our responsibilities as trustee," Ron Gruendl told Bloomberg. "The AG's action is misguided and fails to comprehend the role of the trustee and the benefit the settlement would provide to investors."
Last month, in letters to more than a dozen investment firms involved in the deal, Schneiderman said he was concerned the settlement was made without the full participation of those affected investors.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.