Knights of Columbus File Amended Complaint in BNY Mortgage Security Case

Knights of Columbus, a charitable organization that invested in mortgage-backed securities, seeks to recover losses and demands punitive damages from the bank, according to an amended complaint filed today in New York state court in Manhattan.

Bank of New York, which serves as trustee for trusts holding loans underlying mortgage securities, mismanaged the trust assets, Knights of Columbus said in a statement today. It accused the bank in the complaint of gross negligence and recklessness and said the bank’s actions caused a “substantial” loss.

“It is apparent that the defendant knowingly failed in its obligation to receive, process, maintain, and hold all or part of the mortgage files,” Knights of Columbus, based in New Haven, Connecticut, said. As a result, it didn’t acquire mortgage-backed securities, “but instead acquired securities backed by nothing at all,” the organization said.

Kevin Heine, a spokesman for Bank of New York, said the complaint “is without merit.”