Suit Claims HSBC Bank Finances Defense of Previous Lawsuit with Plaintiff’s Trust Funds

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HSBC Bank USA, National Association is facing a lawsuit filed by Belgian company Royal Park Investments SA/NV over claims that the defendant is improperly withdrawing money from trust funds for its defense in another lawsuit accusing it of misconduct in servicing those same trust funds. According to the complaint, the plaintiff filed suit against the defendant in October 2014 alleging that the bank, as the trustee of the plaintiff’s mortgage-backed trust funds, failed certain duties it was obligated to perform in servicing the trusts. On top of that, the case claims, the defendant is currently pulling money from the funds itself to finance its defense of the 2014 lawsuit. “Thus,” the suit argues, “the investors are being harmed by HSBC twice – first through HSBC’s misconduct as alleged in the Litigation, and second through HSBC’s improper and illegal use of those same damaged investors’ funds to defend itself for its misconduct.”

The suit alleges that the defendant is not permitted to use the plaintiff’s trust fund money for costs that do not directly benefit the plaintiff, such as the defense of its own case against its trustee. During the past three years, the complaint claims the defendant and its counsel “have consistently incurred unreasonable expenses” associated with the lawsuit that have unlawfully been paid with the investors’ money.