HSBC to Appeal $2.46 Billion Judgment By CHAD BRAY LONDON — HSBC Group said Friday that it would appeal yet again a $2.46 billion judgment in a long-running securities fraud lawsuit in the United States related to a consumer-loan and credit-card business that the British bank acquired more than a decade ago. The shareholder lawsuit alleged that Household International, now known as the HSBC Finance Corporation, misled investors about its lending practices, the quality of its loans and its accounting between 1999 and 2002. The lawsuit has wound its way through United States courts for 11 years and has been regularly noted in HSBC’s corporate filings. A federal jury in 2009 in Chicago found partially in favor of the shareholders, but HSBC and the other defendants have repeatedly challenged that verdict. In a decision issued Thursday, Judge Ronald A. Guzman of Federal District Court in Chicago ordered HSBC, as well as three of Household International’s former executives, to pay about $1.48 billion in damages and $986.4 million in prejudgment interest. The defendants were ordered to pay interest while their challenge is heard, most likely in the United States Court of Appeals for the Seventh Circuit. “We plan to appeal and believe we have a strong argument,” Patrick Humphris, a spokesman for HSBC, said Friday. It is the largest judgment in a class-action trial for securities fraud, according to Robbins Geller Rudman & Dowd, the law firm representing the shareholders. It said it continued to challenge objections by the defendants to more than 25,000 additional claims that, if approved, could exceed $650 million. That would bring the total class of claims to more than 45,000 plaintiffs. James Glickenhaus of Glickenhaus & Company, one of the three lead plaintiffs in the case, said in a statement, “We are very pleased that we went the distance in this case, all the way through a jury trial, and that we were able to obtain such a tremendous recovery for shareholders.” The company previously set aside a reserve to cover legal costs that it could incur in the case, though it has not specified them. “HSBC believes it has meritorious grounds for appeal on matters of both liability and damages and will argue on appeal that damages should be nil or a relatively insignificant amount,” HSBC said in its most recent financial report in August. In 2002, when Household International was still a separate company, it agreed to pay $486 million to settle allegations of predatory lending with attorneys general in 46 states. The shareholder lawsuit was filed later that year. HSBC agreed in 2002 to pay $14.2 billion for Household, eventually completing the deal in 2003. The bank then merged the business with another subsidiary to form the HSBC Finance Corporation. The deal was ill-fated for HSBC, with the bank writing down tens of billions of dollars in loans and exiting its operations for consumer loans and mortgages in the United States. Stephen Green, then chairman of HSBC, said in 2009 that it was a deal the bank “wished we hadn’t done, with the benefit of hindsight.” Household International had a storied history in the United States before its regulatory issues arose more than a decade ago. The firm was founded as the Household Finance Corporation in 1878 in Minneapolis and claimed to be the first company to offer installment loans, allowing consumers to repay debt through regular partial payments rather than one lump sum at the due date.
Posted on: Sun, 20 Oct 2013 03:52:37 +0000
Trending Topics
Recently Viewed Topics
© 2015