PNC Bank 2012 Annual Report Download - page 242

In the consolidated amended complaint against PNC Bank in
the MDL Court, the plaintiffs asserted claims for breach of the
covenant of good faith and fair dealing; unconscionability;
conversion; unjust enrichment; and violation of the consumer
protection statutes of Pennsylvania, Illinois and New Jersey.
In the Dasher and Avery complaints,the plaintiffs assert the
same claims, except the state consumer protection statutory
claims relate to the North Carolina statute and the Avery
complaint does not make claims for breach of the covenant of
good faith and fair dealing or for conversion. In the Henry
case, the remaining claims are for breach of contract and the
duty of good faith and fair dealing and for violation of
Pennsylvania’s consumer protection statute. In their
complaints, the plaintiffs seek, among other things, restitution
of overdraft fees paid, unspecified actual and punitive
damages (with actual damages, in some cases, trebled under
state law), pre-judgment interest, attorneys’ fees, and
declaratory relief finding the overdraft policies to be unfair
and unconscionable.
Fulton Financial
In 2009, Fulton Financial Advisors, N.A. filed lawsuits against
PNC Capital Markets, LLC and NatCity Investments, Inc. in
the Court of Common Pleas of Lancaster County,
Pennsylvania arising out of Fulton’s purchase of auction rate
certificates (ARCs) through PNC and NatCity. Each of the
lawsuits alleges violations of the Pennsylvania Securities Act,
negligent misrepresentation, negligence, breach of fiduciary
duty, common law fraud, and aiding and abetting common law
fraud in connection with the purchase of the ARCs by Fulton.
Specifically, Fulton alleges that, as a result of the decline of
financial markets in 2007 and 2008, the market for ARCs
became illiquid; that PNC and NatCity knew or should have
known of the increasing threat of the ARC market becoming
illiquid; and that PNC and NatCity did not inform Fulton of
this increasing threat, but allowed Fulton to continue to
purchase ARCs, to Fulton’s detriment. In its complaints,
Fulton alleges that it then held ARCs purchased through PNC
for a price of more than $123 million and purchased through
NatCity for a price of more than $175 million. In each
complaint, Fulton seeks, among other things, unspecified
actual and punitive damages, rescission, attorneys’ fees and
interest.
In the case against PNC (Fulton Financial Advisors, N.A. v.
PNC Capital Markets, LLC (CI 09-10838)), PNC filed
preliminary objections to Fulton’s complaint, which were
denied. NatCity removed the case against it to the United
States District Court for the Eastern District of Pennsylvania
(Fulton Financial Advisors, N.A. v. NatCity Investments, Inc.
(No. 5:09-cv-04855)), and in November 2009 filed a motion
to dismiss the complaint. The court has not yet ruled on this
motion.
FHLB
In October 2010, the Federal Home Loan Bank of Chicago
brought a lawsuit in the Circuit Court of Cook County,
Illinois, against numerous financial companies, including The
PNC Financial Services Group, Inc., as successor in interest to
National City Corporation, and PNC Investments LLC, as
successor in interest to NatCity Investments, Inc. (Federal
Home Loan Bank of Chicago v. Bank of America Funding
Corp., et al. (Case No. 10CH45033)). The complaint alleges
that the defendants have liability to the Federal Home Loan
Bank of Chicago in a variety of capacities (in the case of the
National City entities, as underwriters) under Illinois state
securities law and common law in connection with the alleged
purchase of private-label mortgage-backed securities by the
Federal Home Loan Bank. According to the complaint, the
Federal Home Loan Bank purchased approximately $3.3
billion in mortgage-backed securities in total in transactions
addressed by the complaint, approximately $345 million of
which was allegedly in transactions involving the National
City entities. The complaint alleges misrepresentations and
omissions in connection with the sales of the mortgage-backed
securities in question. In its complaint, the Federal Home
Loan Bank seeks, among other things, rescission, unspecified
damages, interest, and attorneys’ fees. In November 2010, the
defendants removed the case to the United States District
Court for the Northern District of Illinois. In January 2011, the
district court remanded the case to the Circuit Court of Cook
County. The plaintiff amended its complaint in March 2011
and filed a corrected amended complaint in April 2011. The
corrected amended complaint does not identify any additional
transaction for which the plaintiff seeks recovery from PNC
nor does it add any additional substantive allegations. In May
2011, the defendants filed a motion to dismiss the corrected
amended complaint. The motion was denied in September
2012.
Weavering Macro Fixed Income Fund
In July 2010, PNC completed the sale of PNC Global
Investment Servicing (“PNC GIS”) to The Bank of New York
Mellon Corporation (“BNY Mellon”), pursuant to a stock
purchase agreement dated February 1, 2010. In July 2009, the
liquidators of the Weavering Macro Fixed Income Fund
Limited (“Weavering”) issued a Plenary Summons in the High
Court, Dublin, Ireland, in connection with a European
subsidiary of PNC GIS’s provision of administration services
to Weavering. The Plenary Summons was served on the PNC
GIS subsidiary (GIS Europe) on or about June 30, 2010. In
May 2011, the liquidator served a Notice of Intention to
Proceed and Statement of Claim, which alleges, among other
things, that GIS Europe breached its contractual duties to
Weavering as well as an alleged duty of care to Weavering,
and investors in Weavering, and makes claims of breach of the
administration and accounting services agreement, negligence,
gross negligence, breach of duty, misrepresentation and
negligent misstatement. The statement of claim further alleges
that investors in Weavering lost approximately €282,000,000
and that, in addition, expended approximately €98,000,000 in
brokerage and exchange commissions, interest, and fees as a
result of the transactions at issue. The statement of claim
seeks, among other things, damages, costs, and interest. In
The PNC Financial Services Group, Inc. – Form 10-K 223