SEATTLE (CN) – The Northern Trust Co. lost $7.5 million of the University of Washington’s endowment in a matter of days by lending its endowment funds without adequate collateral, and refuses to return to the school the $750 million in endowment funds it’s loaned out, the university says in King County Court.
Northern Trust holds $1.4 billion of the university’s endowment funds, the UW says. It claims Northern loaned out $750 million in securities, for which, by contract, it was to obtain collateral.
The university says that on Sept. 17, Northern Trust informed it that it had lost $750,000 of the collateral. On Sept. 19, Northern said the losses had reached $5.3 million. By Sept. 23, it said it had lost $7.5 million.
The university said it ordered Northern to call back the loans, as it is obligated to do by contract, but Northern refused, or was unable to. The UW says Northern sought help from the Federal Reserve, which rebuffed it.
The university is represented by the Washington state attorney general, through Foster Pepper.