An Illinois federal judge has approved a record-breaking $1.575 Billion settlement that ends a 14-year lawsuit between HSBC unit Household International Inc. and a class of investors alleging securities fraud. U.S. District Judge Jorge L. Alonso granted final approval to the settlement reached in June. This is the largest securities fraud class settlement in the Seventh Circuit and the seventh largest ever.
The investors claimed back in 2002 that Household International, which HSBC acquired in 2003, and three of Household’s former top executives lied about the company’s lending practices, financial accounting and loan quality.
The fraudulent deception forced Household higher-ups to restate nine years’ worth of earnings to reflect that the company overstated its revenue by $386 million in the course of those years. The shareholders won a jury verdict in 2009, and a judge hit the bank with the judgment in 2013. But the Seventh Circuit last year reversed the partial final judgment and sent the case back for a new trial. The $1.575 billion settlement was announced on the eve of the second trial.
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