fiduciary duty

Gretchen Morgenson, a columnist for The New York Times, writes that the approval of a $8.5 billion settlement between Bank of American and 22 investors in mortgage-backed securities could set the standard for what duty trustees have to protect investors. Morgenson writes: "Trustees for asset-backed securities have a duty to ensure that the companies administering them, known as servicers, do right by the investors who own them. But testimony in the case, known as an Article 77 proceeding, indicates that during months of settlement talks, Bank of New York Mellon did not do all it could to ensure that all investors holding the Countrywide securities got the best deal possible from Bank of America. If the settlement is blessed by the justice, Barbara R. Kapnick, the standard for acceptable behavior by a trustee on behalf of investors will be low indeed. Her ruling will undoubtedly be cited as a precedent for other similar mortgage matters waiting to be heard."