This has been a long time in coming, and helps little to soothe the anger felt by Household International shareholders, many of whom were employees.
A federal jury in Chicago on Thursday found securities-fraud liability on behalf of Household International, now part of HSBC, and four of its executives. Click here for a writeup from AmLaw’s Andrew Longstreth; here for Kevin Lacroix’s take at the D&O Diary; and here for more from Adam Savett’s Securities Litigation Watch blog; here for a story from the Chicago Trib. (all links open in a new window)
The case had been kicking around the courts for nearly seven years. On behalf of a group of Household shareholders, Coughlin Stoia’s Michael Dowd had asserted securities fraud claims based on 40 statements Household made about its mortgage lending practices. Jurors didn’t give Coughlin an unqualified victory; but agreed with the plaintiffs on 16 of the 40 allegations.
“We are extremely proud of our trial team and pleased that defrauded shareholders have won this historic victory,” said Coughlin Stoia partner Patrick Coughlin. In a statement, HSBC said it “strongly disagrees with those findings of the jury that were for the plaintiffs,” and that it would ask the court to vacate the ruling. Lawyers at Cahill Gordon represented HSBC/Household.
Household International Inc. executives made misleading public statements about the company’s business practices, deceiving shareholders, a Chicago federal court jury found after a monthlong trial.
The jury returned the verdict Thursday after 3 1/2 days of deliberation, finding the company and three executives, including former Household Chief Executive William Aldinger, made the remarks recklessly.
Jurors didn’t award a lump sum to shareholders. U.S. District Judge Ronald A. Guzman, who presided over the trial, admonished them not to discuss the case publicly and told trial lawyers not to talk to the jurors because the case isn’t over.
Having found Household and the executives liable for making misleading statements, the jury calculated the amount of shareholders’ daily losses at as much as $23.94 a share from March 23, 2001, to Oct. 11, 2002.
Potential Loss
The company said in corporate filings that it had an average of 455.4 million shares outstanding for the three months ended Sept. 30, 2002, meaning the panel’s findings could indicate a loss of billions of dollars.
“The jury’s verdict is a victory for the millions of Americans suffering as a result of deceptive predatory lending practices,” said Patrick Coughlin, whose San Diego-based law firm, Coughlin Stoia Geller Rudman & Robbins brought the suit.
HSBC will complain, appeal, whine, kick, scream, and moan, but no matter what happens we know the verdict is correct.
Related posts:
- HSBC disagrees with Lawrence E. Jaffe Pension Plan v. Household International, Inc
- Hong Kong Monetary Authority, U.S. Federal Reserve and HSBC’s Household International
- HSBC’s richer place for some is a poorer place for others
- Household International lawsuit as HSBC goes to trial in 2009
- Timeline of Household International and HSBC troubles
