HSBC finance unit to book US$585 million charge for lawsuit settlement
HSBC Holdings plans to record a US$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 US$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 practises.
A federal jury in Chicago in 2009 ruled that executives at Household, which was acquired by London-based HSBC in March 2003 for US$15.5 billion, made recklessly misleading comments. In October 2013, a judge entered a US$2.46 billion judgement 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.