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More Details on BNY Pricing Issue, Massachusetts Launches Investigation

Additional details are coming to light regarding the pricing issues recently experienced by BNY Mellon and several fund complexes. The problems were “caused by an unforeseen complication resulting from an operating system change performed by SunGard on Saturday, August 22nd,” according to a statement from BNY. The statement noted that BNY service provider Sungard Systems tested the update in a non-production environment, but that production systems became corrupted when Sungard applied the changes. Complicating issues even more, the backup systems became corrupted at the same time. Reuters reported that the outage affected $404 billion in assets.

According to the Wall Street Journal, Sungard finished rebuilding the system from scratch by midnight on August 27. However, as BNY employees began the work of calculating fund values, the system crashed at 4 a.m. As a result, BNY Mellon asked Sungard employees to work on site at BNY’s offices in New Jersey so that the firm could properly oversee the work and have outside engineers approve all changes. At the same time, BNY had assembled more than 100 accountants as a contingency plan, according to the WSJ. By the open of trading on Monday, August 31, the company had finally caught up with the pricing backlog.

Massachusetts Secretary of State William Galvin is launching an investigation into the issue, according to Reuters. Last week, Galvin sent letters to BNY Mellon and six mutual fund complexes, the contents of which have not been disclosed. Galvin also made news recently for launching an investigation into the sale of alternative mutual funds.