The stock price of
HSBC Holdings plc
) remained almost stable since a $2.46 billion fine was imposed
on its U.S. wing last Thursday. While $1.48 billion of the total
amount charged was for the actual financial losses, the remaining
was the prejudgment interest.
It was alleged that Household International (acquired by HSBC in
2003 and renamed as HSBC Finance Corp) and its former employees
William Aldinger, David Schoenholz and Gary Gilmer adopted
predatory lending practices. They were accused of misguiding
investors with respect to the quality of loans and its accounting
since Mar 23, 2001 through Oct 11, 2002.
This violated the federal securities laws and consequently a
lawsuit was filed against the company by shareholders - including
James Glickenhaus of Glickenhaus & Co. - in the later half of
2002. The case has been trailing since then.
Earlier, in 2009, a jury in Chicago ruled in favor of the
plaintiffs but it was challenged by HSBC. This time again, HSBC
intends to counter the charge, by appealing against the judgment.
In August this year,
reported that the bank might have to pay a sum of $1.6 billion as
part of its settlement with
). The settlement includes the resolution of all outstanding and
potential repurchase claims relating to misrepresentations of
loans originated and sold directly to Freddie Mac by HSBC between
2005 and 2008.
Among other banks, in August,
) announced a similar settlement with Freddie Mac worth about
$395 million. Similarly,
Bank of America Corporation
) announced an agreement with Fannie Mae worth about $10.3
billion in Jan 2013.
Currently, HSBC holds a Zacks Rank #3 (Hold).
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