Articles Tagged with HSBC Finance Corp.

HSBC Finance Corp., an HSBC Holdings Plc. (HSBC) unit, will pay $1.575B to settle a shareholder class action securities case that was brought in 2002. The case involves Household International, the consumer finance business that HSBC purchased in 2003. Household International is now HSBC Finance.

Household shareholders accused the company of inflating its share price by hiding its poor mortgage lending practices and bad quality loans. When Household consented to pay U.S. state regulators $484M to resolve predatory lending claims in 2011, its share price dropped by over 50%.

HSBC became the defendant against claims by Household shareholders when it purchased the company for $14.2B. That deal eventually led to write-downs for tens of billions of dollars for bad loans in the wake of the subprime mortgage crisis.

Shareholders won a $2.46B judgment against the British Bank in 2013. In May 2015, however, a federal appeals court tossed the award and demanded a new trial to decide whether “nonfraud factors” that were specific to the firm played a part in the Household’s share price dropping.

 

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