A unit of British bank HSBC Holdings PLC has reached a preliminary agreement to pay $1.58 billion to settle a shareholder class-action complaint over securities fraud tied to the bank’s U.S. subprime lending.
The proposed settlement — which would cover those who owned Household International stock anytime between March 23, 2001, and Oct. 11, 2002 — is subject to court approval. HSBC estimated it would book a $585 million charge, before taxes, in the second quarter.
The London-based bank, Europe’s largest by assets, had previously estimated the financial exposure from the shareholder claims at around $3.6 billion.
A tentative agreement was reached on June 6, just hours before jury selection was to start, said Mike Dowd and Dan Drosman, partners with Robbins Geller Rudman & Dowd LLP and lead trial lawyers for the plaintiffs, including one-time investment firm Glickenhaus & Co., PACE Industry Union Management Pension Fund, and the International Union of Operating Engineers Local No. 132 Pension Plan.