HSBC wins reversal of $2.46 billion Household judgment
By Jonathan Stempel
CHICAGO (Reuters) - A U.S. appeals court on Thursday reversed a $2.46 billion judgment against HSBC Holdings Plc (HSBA.L: Quote) in a long-running securities fraud class action stemming from a consumer finance business it bought more than a decade ago.
The 7th U.S. Circuit Court of Appeals in Chicago said HSBC and three former Household International Inc executives were entitled to a new trial over whether "firm-specific, nonfraud factors" contributed to a plunge in Household's share price that was the basis for the shareholder lawsuit, which began in August 2002.
"As things stand, the record reflects only the expert's general statement that any such information was insignificant," Circuit Judge Diane Sykes wrote for a three-judge panel, referring to a witness for the plaintiffs, law professor Daniel Fischel. "That's not enough."
The panel also said the former Household officials - Chief Executive Officer William Aldinger, Chief Financial Officer David Schoenholz and consumer lending president Gary Gilmer - deserve a new trial over their alleged liability for making false statements.
HSBC spokesman Rob Sherman said the British bank has long argued that "the verdict was defective and needed to be reversed, and the court of appeals has now agreed."
Michael Dowd, a Robbins Geller Rudman & Dowd partner representing the plaintiffs, said that absent further appeals, his clients will present the "very limited" remaining issues to a jury. "We believe that we will prevail and that class members will finally get the justice they deserve," he said.
The $2.46 billion judgment included nearly $1.48 billion of damages and $986 million of interest. It was imposed in October 2013 by U.S. District Judge Ronald Guzman in Chicago.
Robbins Geller called it the largest judgment in a U.S. securities class action that went to trial. Continued...