Judge Urges BONY to Settle Suit

The judge hearing the government's $22.5 billion lawsuit against the Bank of New York Mellon said Thursday that the case should be settled out of court.

"This case is long, it is expensive, you are both facing major expenditures on this. ... So, given the financial crisis that has unfolded, it would be wise for you to cut your expenditures by reaching some kind of settlement," Judge Lyudmila Pulova said.

Since last May, Russia has been seeking compensation from the bank after its former vice president, Lucy Edwards, helped illegally transfer $7 billion out of Russia in the late 1990s through Bank of New York accounts. The bank says the case is without merit.

Steven Marks, the chief counsel for Russia's Federal Customs Service, which is the plaintiff in the case, said the government has always been open to a settlement.

"The court has asked a very good question," Marks said. "We have on numerous occasions before the suit was filed and during the process tried to seek a dialogue with the bank. The bank has expressed no interest at that time."

Ivan Marisin, lead counsel for the bank, told the court that he could not comment on any attempts to settle because he was not aware of them.

"The fastest way to end a case is for the plaintiff to withdraw it," he told the court.

The bank said in a statement, however, "The case is not in our interest or Russia's interest and should be resolved."

"While we would never say never to a nominal settlement, as our Russian experts have made clear, the case is without merit, and there has been no effort by the plaintiff to settle that reflects that fact," the bank said.

The judge has previously expressed annoyance with the duration of the case, which is now in its 18th month. Lawyers have likewise complained of the cost of translating thousands of pages of documents and shuttling expert witnesses from the United States to give testimony in Moscow.

Marisin, of the British law firm Clifford Chance, has said the price of a single translation job could be more than $500,000.

Outside the courtroom, Marisin and a lawyer for the government, Maxim Smal, joked in front of reporters about the possibility of a settlement. "Maybe 10 billion [dollars] would be enough for us," Smal said.

Marks, who designed the case for the customs service, is from the Miami-based law firm Podhurst Orseck. Before filing the case last year in Moscow, he approached the bank with an offer to settle for $600 million. The bank declined the offer.

The lawsuit is being closely watched by investors and clients of Bank of New York Mellon, which is the world's largest custodian of financial assets. Some analysts have downgraded the bank's stock, citing the risk of a judgment against it.