The University of Washington has settled a lawsuit with Northern Trust over a dispute involving the university’s loss of $7.5-million in the bank’s $750-million securities-lending program.

“We are pleased to have reached a reasonable settlement with the University of Washington,” said John O’Connell, a spokesman for the Illinois-based bank.

He declined to comment on the terms of the settlement. A representative of the university acknowledged that the deal had been completed over the weekend but said the university had agreed not to comment on the details.

After learning on September 17 that it had suddenly lost nearly $750,000 — a figure that would grow to $7.5-million — as part of the securities-lending program that began in April, the university filed the suit charging that its written requests to end the lending agreement had been denied by the bank. The university’s contract with Northern Trust had stipulated that university officials could end the lending agreement “at any time by written notice.”

Securities-lending programs are common among large investors, including college endowment funds, as a way of earning extra money. Banks that hold securities for investors — like the university — lend them to other investors, most of whom then “bet,” in effect, that they can sell the securities and snap them up later at a lower price.

Northern Trust had acted as custodian for about $1.4-billion of the university’s money, nearly half of its estimated $3-billion endowment. —Reeves Wiedeman