Bank of New York Mellon Corp is under pressure to take the chairman's title from Chief Executive Gerald Hassell, following client defections and lost revenue over allegations of foreign exchange fraud.
In a letter to BNY Mellon shareholders, CtW Investment Group urged investors to vote for an independent chairman at the company's April 10 annual meeting. CtW represents pension funds that own an estimated 6 million shares in the custody bank, which accounts for less than a 1 percent stake.
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"We are urging support for the shareholder proposal calling for an independent chairman of the board at Bank of New York Mellon," CtW said in a letter filed with U.S. Securities and Exchange Commission.
"Ensuring independent leadership of the board is vitally important in light of the numerous lawsuits filed against the company alleging fraud in its foreign exchange business in an amount up to $2 billion," CtW added.
BNY Mellon has denied any wrongdoing in the forex cases.
New York-based BNY Mellon, the world's largest custody bank, has about 1.2 billion shares outstanding. Its board of directors has urged shareholders to vote against the proposal. Under company bylaws, the board has said the powers of the chairman are limited and can also be exercised by the board.
CtW said the proposal already has the support of Institutional Shareholder Services, a leading proxy advisor firm. Trowel Trades S&P 500 Index Fund, which holds about 26,724 shares of BNY Mellon's stock, put forward the proposal.
CtW Executive Chairman William Patterson said appointing an independent chairman is a necessary first step in "ensuring more proactive oversight of these legal risks and stemming any further loss of faith by clients."