The HSBC Holdings Plc (HSBA) unit once known as Household International Inc. lost its bid to undo a 2009 securities fraud trial verdict and is liable for about $1.5 billion in damages plus interest, a judge ruled.
U.S. District Judge Ronald Guzman in Chicago today denied the lender’s motions for a new trial or a decision in its favor and ordered plaintiffs’ lawyers to submit a proposed final judgment within five days.
“This court expressly determines that there is no just reason for delay and directs that a final judgment be entered” in favor on almost 11,000 claims, Guzman said in his ruling.
Household stockholders sued in 2002, alleging the company and three executives made misleading statements about its mortgage-lending practices. The lender had earlier agreed to pay $484 million in fines to settle claims lodged by more than a dozen states.
In May 2009, a jury decided the company, former Chief Executive Officer William Aldinger and two other people made recklessly misleading comments 16 times, and in one instance involving Aldinger did so knowingly.
Neil Brazil, an spokesman for HSBC, didn’t immediately respond to phone and e-mail messages after regular business hours seeking comment on today’s ruling.
Class-action plaintiffs’ lawyer Darren Robbins, a partner in San Diego-based Robbins Geller Rudman & Dowd LLP, didn’t immediately respond to an e-mail seeking comment on the ruling.
While the trial jury had determined that stockholder losses from March 23, 2001, to Oct. 11, 2002, could be as much as $23.94 a share, it made no lump-sum award. The ensuing claims evaluation process lasted four years.
In a separate order today, Guzman ratified a special master’s report that determined the damages to be awarded to four different groups of claimants. The judge’s ruling directs entry of the largest sum of damages. The other claims remain to be resolved.
Household was acquired by London-based HSBC in March 2003 for $15.5 billion. It is now known as HSBC Finance Corp.
The case is Lawrence E. Jaffe Pension Plan v. Household International Inc., 1:02-cv-05893, U.S. District Court, Northern District of Illinois (Chicago).
Source : bloomberg