HSBC to pay $1.575 billion, ending Household International class action

© Reuters. A taxi drives past a branch of HSBC bank in London

By Jonathan Stempel (Reuters) – An unit of HSBC Holdings Plc (L:-RRB- said on Thursday it will pay $1.575 billion to end a 14-year-old investor class action lawsuit coming from the Household International consumer finance company that the British bank bought in 2003. HSBC Financing Corp expects to take a roughly $585 million pre-tax charge in the second quarter for the settlement, which requires court approval. It stated it might have faced liability as high as $3.6 billion. The accord averts a 2nd trial in the lawsuits, which had been expected to start recently in the U.S. District Court in Chicago before being postponed. “We are pleased to resolve this 14-year case that’s based upon events that occurred before HSBC obtained Family,” HSBC representative Rob Sherman stated in a statement. Michael Dowd, a lawyer representing the complainants, did not right away react to requests for remark. In lawsuits that began in 2002, Family investors implicated that business of inflating its share rate by concealing its poor financing practices and loan quality. The share rate fell more than 50 percent from mid-2001 to October 2002, when Household consented to pay $484 million to settle predatory financing claims by U.S. state regulators. HSBC began resisting the shareholder asserts after buying Family for approximately $14.2 billion. In October 2013, the investors won a $2.46 billion judgment against HSBC, thought to be the biggest in a U.S. securities class action that went to trial. But in Might 2015, the federal appeals court in Chicago threw away that award and ordered a brand-new trial to determine whether “firm-specific, nonfraud factors” contributed to the drop in Household’s share rate. HSBC’s purchase of Family eventually soured, and led to 10s of billions of dollars of writedowns for bad loans. The bank shut much of its U.S. consumer finance company in March 2009. The case is Jaffe et al v Home International Inc et al, U.S. District Court, Northern District of Illinois, No. 02-05893. Disclaimer: Fusion Media would like to remind you that the data contained in this site is not always real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex costs are not supplied by exchanges but rather by market makers, therefore costs might not be accurate and may vary from the actual market value, meaning costs are indicative and not appropriate for trading purposes. Therefore Combination Media does n`t bear any obligation for any trading losses you might sustain as an outcome of utilizing this data. Fusion Media or anyone involved with Fusion Media will decline any liability for loss or damage as a result of dependence on the information consisting of information, quotes, charts and buy/sell signals contained within this website. Please be totally informed relating to the dangers and expenses related to trading the monetary markets, it is one of the riskiest investment kinds possible.

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