A former executive for five years at the Bank of New York Mellon Corp. alleges he was wrongly fired and retaliated against after he reported his supervisor’s potentially illegal acts to the bank’s in-house counsel.
John “Jack” Yang, former head of the Americas for the bank’s Alcentra NY unit, has filed suit in U.S. District Court of the Southern District of New York seeking up to $16 million in damages. Alcentra NY, also a defendant, is an investment adviser and subsidiary that shares BNY Mellon’s legal, human resources and other services.
BNY Mellon referred questions to an Alcentra spokesman Thursday, who said, “We will not comment on any litigation beyond stating that we think the allegations are baseless and without merit.”
Yang’s attorney, Manisha Sheth of Quinn Emanuel Urquhart & Sullivan, told Corporate Counsel, “Mr. Yang has been treated poorly by defendants here, particularly in light of all his good work at the company. We look forward to his day in court.”
Yang’s complaint shows his problems began around Aug. 21, 2018, at a meeting of Alcentra’s management committee in London. The meeting included Yang, Alcentra co-founder and CEO David Forbes-Nixon, then-chief investment officer Vijay Rajguru, and the company’s chief financial officer.
Forbes-Nixon had agreed in 2017 to a five-year collaboration with Stira Adviser, a non-BNY Mellon affiliate, to be a subadviser on a certain interval fund. Yang was placed on the board of trustees of the Stira fund.
Here is what happened next, according to the complaint:
At the 2018 management meeting, Forbes-Nixon and Rajguru criticized the lagging performance of the Stira fund. Forbes-Nixon called the collaboration a “mistake” and said Alcentra should resign as subadviser as soon as possible.
The CFO advised that immediate termination was not possible as Alcentra was obligated under the terms of its subadviser agreement to provide Stira with 90 days’ notice of resignation.
But “based on the tone of the meeting and the contents of the discussion, Mr. Yang believed that Mr. Forbes-Nixon and Mr. Rajguru had determined that the relationship with Stira Adviser must end immediately and were unwilling to tolerate any opposition.”
Following the meeting, Rajguru emailed Yang and two other executives that “there were to be no more investments, no more meetings, no more updates” provided to Stira.
Yang forwarded the directive to the BNY Mellon in-house counsel whose practice focused on legal issues with mutual and other regulated investment funds, and to the head of U.S. compliance at Alcentra. Sheth declined to give any more details about the in-house counsel, including a name.
Yang’s concern was that Alcentra would breach “its legal obligations [under the Investment Company Act of 1940], contractual obligations and fiduciary duties.” His reporting to in-house counsel and compliance was done in accordance with BNY Mellon’s Code of Conduct and related policies.
Following Yang’s report, BNY Mellon counsel contacted Rajguru and advised him that even if Alcentra gave proper notice of resignation, it was still responsible for carrying out its duties as subadviser through at least the summer of 2019.
Forbes-Nixon then asked Stira Adviser to provide certain information, and Stira Adviser asked Yang to review its proposed responses.
Yang’s review of the information later became part of Alcentra NY’s purported justification for terminating him in January 2019.
The other justification cited was an alleged misuse of personal email for communicating company business.
Meanwhile, Yang alleges that Alcentra, led by Forbes-Nixon, began retaliating against him by treating him in a hostile manner, giving him an unwarranted negative year-end performance review and reducing his compensation.
The complaint alleges illegal retaliation under the Sarbanes-Oxley Act and seeks an award of base pay and bonuses of at least $4.8 million, deferred compensation of at least $4.2 million and front pay of at least $7 million. It also seeks an unspecified amount for special damages for emotional distress and loss of reputation, plus attorney fees.