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HSBC Slapped With Record $2.46B Securities Class Action Settlement
By Dominic Rivera
A United States District Judge has ordered Household International Inc., now HSBC Finance Corp., to pay $2.46 billion in a class action lawsuit alleging that it violated federal securities laws. Included in the lawsuit are three of its former top executives, namely: William Aldinger, David Schoenholz and Gary Gilmer.
The class action lawsuit alleged that the company fraudulently misled investors about its lending practices, the quality of its loans and its financial accounting from March 23, 2001 until October 11, 2002. It should be noted that HSBC acquired Household International in 2003. News reports then said that the acquisition made HSBC the largest subprime lender in the U.S.
The judgment by District Judge Ronald A. Guzman consists of approximately $1.5 billion in damages and almost $1 billion of prejudgment interest.
The judge also ordered the defendants to pay post judgment interest which will accrue during the defendants’ expected appeal, and certain costs incurred by plaintiffs after more than 10 years of litigating the case.
Lawyers for the plaintiffs said that during the trial, they “presented evidence to the jury that Household International’s growth and revenues were driven by an allege systematic and company-wide predatory lending practices. Household International’s fraud included misrepresenting interest rates, charging prepayment penalties in violation of state law and hiding prepayment penalties in the loan terms, packing the loans with insurance that the borrowers did not need or want, charging the borrowers excessive fees or points, and loan splitting.”
Loan spitting refers to the practice of unnecessarily splitting one loan into two so the borrower was forced to pay a higher, noncompetitive rate on the first loan.
During the trial, the plaintiffs’ lawyers said that former CEO William Aldinger also admitted under oath that the disclosures in its 2001 Form 10-K were materially false and misleading. The admission came after “plaintiffs presented evidence that the defendants manipulated the credit quality of Household International’s loan portfolio to conceal the true level of delinquencies and mask the poor quality of its loans,” lawyers for the plaintiffs said. Other evidences presented include the plaintiff’s allegation that defendants destroyed documents to cover up the fraud.
HSBC said that they will appeal, noting that it was “the next step in an 11-year-old case and we believe we have a strong argument.”
The case, Lawrence E. Jaffe Pension Plan v. Household International, Inc., et al., Case No. 02-C-5893, is pending in the United States District Court for the Northern District of Illinois.
The lead plaintiffs are Glickenhaus & Co., PACE Industry Union-Management Pension Fund, and International Union of Operating Engineers Local No. 132 Pension Plan.
All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions
52 thoughts onHSBC Slapped With Record $2.46B Securities Class Action Settlement
LET ME KNOW HOW TO FILE FOR THIS PLEASE.
I’ve had several accounts with HSBC.
Where do I sign up? My HSBC loan was recently sold to Springleaf and I am still paying interest from 2005.
I had a mortgage,checking,savings and online account before they switched me over to first Niagara. should I be part of this action?
I had both a loan and a credit card. How will this affect me and where do I sign up?
I would like too know how to file against them.
Is this for credit cards that were through HSBS?
I to would like to know where I can fill out a claim form, I have been paying onmy loan since 2000 and I am still paying on the interest; so I how can I ever pay off this loan? It has been 13 years and I’m still paying interest.
how do I fill out a claim form
Still, no banksters in jail. Imagine, you steal an orange at WalMart and go to jail but you rob the population of an entire country and get bailed out with the victims’ own money. What ponzi scheme Wall Street and Washington got going!