“Failure to preserve and produce relevant documents is conduct worthy of censure” wrote Justice William Hourigan of the Court of Appeal for Ontario in the court’s scathing September 2024 ruling against The Bank of New York Mellon Corporation, now called BNY, for breach of contract with SS&C Technologies Canada Corp. He went on to say that BNY’s “tactical decision to ignore its obligations “smacks of contempt for the justice system.” SS&C Technologies Canada is an affiliate of Windsor, Connecticut-based SS&C Technologies (SSNC).
Justice Hourigan’s sharp rebuke has escalated into a high stakes battle before the Canada’s Supreme Court with the outcome potentially costing BNY at least USD$150 million in damages — far more than lower court rulings — and possibly setting a legal precedent about how judges should penalize firms for spoilation. SS&C decided to take its case all the way to Canada’s top court after both the trial and appellate courts in that country did grant SS&C some compensation on the basis that only the parent firm BNY (BK) and not its affiliates was entitled to receive SS&C’s market data. However, the courts did not penalize BNY for destroying evidence needed to prove how much SS&C was damaged by BNY’s illegal sharing of SS&C’s data with its affiliates.
As reported by FinOps Report in July 2023 the Ontario Superior Court of Justice ruled that SS&C was entitled to about USD$12 million in damages for breach of contract and in September 2024 the Ontario Court of Appeal reduced the amount to USD$11 million. SS&C originally asked for a whopping USD$890 million, which included late fees with compounded interest as allowed by SS&C’s agreements with BNY and CIBC Mellon. The USD$150 million figure SS&C now wants does not incorporate any overdue amounts at the rate agreed in its market data contracts. Those agreements governed mainly end-of-day prices on Canadian equities and bonds needed to value and analyze client portfolios in asset servicing departments such as custody, fund administration, and investment operations. SS&C’s valuation of damages was completed by Daniel McGavock, vice president and practice leader of Intellectual Property at Chicago-headquartered global consultancy Charles River Associates.
The Legal Stakes
Preservation of electronic data is considered a critical component of an effective compliance program. Without data retention, financial firms are unable to show whether they are abiding by their regulatory and contractual requirements. Based on Canadian common law, judges have tremendous leeway in how and even whether they sanction financial firms for destroying evidence. The burden of proof to receive any compensation also rests with the damaged firm. By contrast, the penalty for spoilation of data in the U.S, is governed by Rule 37 (e) of the Rules of Federal Procedure which require judges to impose sanctions. However, the litmus test for proving spoilation may differ depending on which U.S. federal circuit court decides. The Court of Appeals for the Seventh Circuit, governing cases in Illinois, Indiana and Wisconsin, has set the highest standard.
SS&C wants to change the status quo in Canada which makes it difficult for a firm to win any compensation for data spoilation. “The burden of the adverse effects of spoilation must rest entirely on the spoliator, not on the innocent party,” asserted SS&C’s external counsel Chris Paliare, a partner in the Toronto law firm of Paliare Roland Rosenberg Rothstein LLP in SS&C’S brief to the Supreme Court of Canada. “Rather than allowing discretion to govern whether to impose a remedy and then allowing trial judges to exercise unbounded discretion in deciding how a remedy should operate, this Court should instruct that, once the high bar of proving spoilation is met, a trial judge must presume the highest possible findings against the wrongdoer.” BNY is represented by the Toronto law firms of McCarthy Tetrault and Lenczner Slaght.
Canadian legal experts are supporting SS&C on the grounds the trial and appellate courts were wrong in their rulings on spoilation. “Regardless of whether spoilation is treated as merely an evidentiary rule or a standalone tort claim, the appellate court held that an adverse inference is an available spoilation remedy,” wrote Masiel Matus, a partner in the law firm of Affleck Green McMurty in Toronto in an article posted in May 2025. “SS&C established spoilation and the reasonable inference was that BNY’s refusal to preserve and produce the relevant data was to suppress the truth in the litigation.” She is hopeful the Supreme Court of Canada will rule in SS&C’s favor and clarify the remedies for data spoilation in that country.
Who’s At Fault
Data vendors typically restrict how financial firms can use their data and clients must keep records to show they are abiding by the terms of their contracts. Yet in February 2017 when asked by Paliare to show the audit trail of BNY’S usage of SS&C’s market data, BNY through its counsel at McCarthy Tetrault refused on the grounds it had done nothing wrong. Justice Hourigan vehemently disagreed. “It is not open to lawyers or parties to ignore their obligations under the Rules of Civil Procedure [R.R.O. 1990, Reg 194] and At common law based on their opinion of the merits of a potential claim,” he wrote. “As found by the trial judge, BNY knew or ought to have known that the data was required for the litigation, yet it was never produced, and no explanation was ever proffered by BNY or its counsel regarding why it was not preserved.”
Justice Hourigan suggested that an attorney at McCarthy Tetrault must have been pressured by BNY to withhold evidence. “He is an experienced litigator, and I must assume he advised his client that its position was unsustainable,” he wrote in the appellate court’s ruling. It cannot be proven whether BNY strongarmed its external law firm to acquiesce to its wishes. It could also not be confirmed which attorney at McCarthy Tetrault advised BNY to refuse to produce the required documentation. Coincidentally, F. Paul Morrison, a partner at McCarthy Tetrault, left the law firm in August 2018 after 39 years of service to join rival Miller Thompson as counsel. Morrison did not respond to e-mailed questions from FinOps Report about the timing of his decision.
By May 2020, BNY appears to have changed its tune about why it didn’t produce evidence on how extensively it had distributed SS&C’s data. This time the bank laid the blame on its technology. Paliare’s brief to Canada’s Supreme Court included a brief mention in an appendix that the InvestOne platform used by BNY should have maintained records of anyone accessing SS&C’s data. Instead, the audit trail for the platform showing the entities or client service officers accessing the system lasted only 30 days. That audit trail was “unavailable” from 1999 to 2017, according to BNY. The user log-in information was overwritten each time a user logged into the InvestOne system so there was no historic record. The glaring recordkeeping lapse isn’t the only operating inefficiency BNY has faced with InvestOne, now called FIS Investment Accounting Manager. In another snafu reported by FinOps Report in September 2015, InvestOne was responsible for BNY temporarily mispricing the net asset value of over one thousand mutual funds and exchange-traded funds valued at over USD$400 billion. Owned by FIS Global, the rebranded FIS investment Accounting Manager is a popular system used by asset managers and fund administrators to support any investment strategy.
Intertwined with the issue of data spoilation is just who is SS&C’s client. BNY’s reorganizations and nomenclature muddle the answer. The dispute between SS&C and BNY originated in the agreements SS&C signed with CIBC Mellon in April 1999 and with Mellon Trust in September 1999. BNY inherited Mellon Trust’s contract when it officially merged with Mellon in July 2007 to form Bank of New York Mellon Corporation. The New York-headquartered global bank conceded that Mellon Trust was never a legal entity. It was simply a brand name referring to Mellon Bank’s asset servicing businesses. Even so, BNY believed it was entitled to distribute SS&C’s market data freely within its enterprise. CIBC Mellon cancelled its agreement with SS&C in February 2011 on the grounds it no longer needed the data. SS&C cancelled its contract with BNY in February 2017 after it discovered that CIBC Mellon had continued to obtain the data from BNY in violation of its contract.
The Great Discovery
SS&C caught wind of the illegal data sharing only accidentally in November 2016 after a computer glitch arose in delivering data to CIBC Mellon, which complained about poor service. Had it not been for the technology snafu SS&C might not have ever discovered BNY’s breach of contract. “The obligation to ensure that a data agreement is followed always rests with the user, not the provider,” Jonathan Bloch, chief executive of London-headquartered data vendor Exchange Data International told FinOps Report. “Data vendors rarely, if ever, conduct an audit because the business relationship relies on trust.” If a vendor commissioned an audit, the client would take its business to a competitor. By contrast, exchanges do audit member firms receiving their data.
The Ontario Superior Court used the phrase “adverse inference” to describe BNY’s refusal to produce evidence, but it did not award damages for that misconduct. The rationale: “adverse inference” had nothing to do with spoilation because it was only based on failure to produce evidence. Justice Markus Koehnen also used his own methodology for calculating damages because he disagreed with both BNY and SS&C’s. BNY wanted to pay SS&C nothing or very little and blamed SS&C for not catching BNY’s misuse of data before 2017. SS&C, in turn, based its claim for damages on 65 BNY units receiving its data with each paying the same rate as BNY.
Agreeing with BNY’s argument that each of its units had the same access to the data as the parent bank, Justice Koehnen of Ontario’s trial court awarded USD $5,696,850 with respect to BNY’s distribution of SS&C’s data illegally to 44 other entities. He presumed those business lines only used 55.4 percent of SS&C’s market data. Justice Hourigan of Ontario’s appellate court agreed with Justice Koehnen’s methodology. However, he ruled that BNY had actually shared SS&C’s data with 65 entities, and he did not increase the penalty. The figure of 65 was cited by BNY in a January 2020 letter to SS&C as representing all of the trust and custody businesses that had access to SS&C’s data between 1997 and 2017 at three different points in time. The figure of 44 is what BNY also claimed was the total number of businesses after the amalgamation and merger of BNY units.
SS&C and BNY would not comment for this article. Therefore, it could not be determined whether they have changed any of their policies in the wake of the litigation to prevent a similar scenario with other firms in the future. The Supreme Court of Canada hears fewer than 10 percent of the hundreds of civil cases on appeal each year so BNY likely thought it would only have to pay the US$11 million in damages. That’s nothing more than a slap on the wrist and all SS&C needs to win is for five out of the nine justices on Canada’s Supreme Court to agree with its stance to win.
Although it is unlikely the outcome of the case will have any impact on the US market when it comes to penalties for spoilation of data, at least SS&C has brought a significant issue to light. It is almost impossible to assess damages for breach of contract when a data audit trail is withheld. BNY could end up with a hefty legal fine and even worse reputational damage for deciding not to preserve required critical evidence. Hopefully, other financial firms will learn not to repeat its costly mistake.
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