HSBC Slapped With Record-Breaking $2.46 Billion Fine In Class Action Lawsuit
Bap! HSBC has been hit with a $2.46 billion fine in a judgment against the bank in a class action lawsuit that was filed in 2002.
The case alleged that Household International, a British unit of the bank and three of its executives made “false and misleading statements” that propped up the price of its stock shares. The plaintiffs also said the unit engaged in predatory lending practices and was duplicitous about its loan portfolio. HSBC purchased the unit in 2002; it’s share price had dipped to a low point in 2001. It’s now known as HSBC Finance Corporation.
The fine, according to a statement from the plaintiffs’ law firm Robbins Geller Rudman & Dowd, is a record. HSBC is already preparing an appeal. If the plaintiffs had their way on a number of claims, there would be 45,000 plaintiffs, 25,000 more than there are now. The judgment would also climb $650 million.
Before it was purchased, Household International had agreed to pay $450 million to settle cases of predatory lending in 46 states. HSBC paid $14.2 billion for the company, which was merged with another one of its units.
Seems strange that a bank would acquire a company that has some pretty serious legal problems. However, The New York Times explains that Household International actually went back to 1878 and says it was the first company to offer installment loans. So perhaps HSBC was attracted to the company’s longevity, thinking a business with this kind of history had a leg to stand on and build off of. Whoopsie.