A division of Europe’s HSBC has been ordered to pay about $2.46 billion in a class action lawsuit claiming it violated federal securities laws.
Lawyers for the plaintiffs said that the judgment, which includes $1.48 billion in damages and nearly $1 billion in prejudgment interest, was the biggest ever following a securities fraud class action trial.
HSBC Holdings, Europe’s biggest bank by market value, said in a statement on Friday that it will appeal, noting that it was “the next step in an 11-year-old case and we believe we have a strong argument”.
James Glickenhaus of Glickenhaus & Co, one of the three lead plaintiffs appointed by the court in 2002 to represent the class, said the judgment “shows that the fraud committed by Household International and the individual defendant officers will not go unpunished, and we look forward to having the judgment affirmed on appeal”.
The lawsuit named Household International, which is now HSBC Finance Corp, and former executives William Aldinger, David Schoenholz and Gary Gilmer. It claimed that the company fraudulently misled investors about its predatory lending practices, the quality of its loans and its financial accounting from March 23, 2001, through October 11, 2002.
HSBC acquired consumer lender Household International in 2003. The acquisition made HSBC the biggest subprime lender in the US at the time, which resulted in billions in losses to HSBC leading up to the financial crisis of 2008.