HSBC Holdings Plc plans to record a $585 million pretax charge for settling a 14-year-old shareholder lawsuit over allegations that executives of a business acquired by the bank in 2003 misled investors.
The HSBC Finance unit agreed to a $1.58 billion deal to resolve the litigation, which the parent company inherited through the 2003 acquisition, the bank said Thursday in a statement. The settlement is subject to court approval.
Investors of Household International sued in 2002, alleging the company and three executives made misleading comments about mortgage-lending practices.
A federal jury in Chicago in 2009 ruled that executives at Household, which was acquired by London-based HSBC in March 2003 for $15.5 billion, made recklessly misleading comments. In October 2013, a judge entered a $2.46 billion judgment against HSBC on some claims.
HSBC won a new trial in the case in May 2015 after an appeals court said the investors hadn’t shown that a drop in the company’s share price wasn’t the result of other factors. That trial had been scheduled to begin last week.
The case is Jaffe Pension Plan v. Household International Inc., 02-cv-05893, U.S. District Court, Northern District of Illinois (Chicago)
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