Robbins Geller Rudman & Dowd LLP Obtains $2.46 Billion Judgment Against Household International, Now HSBC Finance Corp.

  Robbins Geller Rudman & Dowd LLP Obtains $2.46 Billion Judgment Against
  Household International, Now HSBC Finance Corp.

The $2.46 billion judgment is largest ever following a securities fraud class
action trial

Business Wire

SAN DIEGO -- October 17, 2013

United States District Judge Ronald A. Guzman today entered a judgment of
$2.46 billion – the largest judgment following a securities fraud class action
trial in history – against Household International (now HSBC Finance
Corporation) and three of its former top executives, William Aldinger, David
Schoenholz and Gary Gilmer.

After a six-week trial, a Chicago jury rendered a verdict in favor of
plaintiffs in May 2009, finding that Household International had violated
federal securities laws by fraudulently misleading investors about its
predatory lending practices, the quality of its loans and its financial
accounting from March 23, 2001 through October 11, 2002. Plaintiffs’ counsel,
Robbins Geller Rudman & Dowd LLP (“Robbins Geller”), fought the defendants’
repeated attempts to derail the litigation after the verdict, which included
several post-trial motions to invalidate the verdict and objections to tens of
thousands of claims by injured class members. After the verdict, the Court
also considered and ruled on issues concerning the reliance of absent class
members on defendants’ fraudulent statements. The judgment follows an October
4, 2013 order from the district judge denying all of the defendants’
post-trial motions.

“We are very pleased that we went the distance in this case, all the way
through a jury trial, and that we were able to obtain such a tremendous
recovery for shareholders. 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,”
said James Glickenhaus of Glickenhaus & Co., one of the three lead plaintiffs
appointed by the Court in 2002 to represent the class.

The judgment consists of approximately $1.5 billion in damages and almost $1
billion of prejudgment interest. Judge Guzman also ordered the defendants to
pay postjudgment interest, which will accrue during the defendants’ expected
appeal, and certain costs incurred by plaintiffs after more than 10 years of
litigating the case. Robbins Geller is continuing to litigate defendants’
objections to over 25,000 additional claims with losses in excess of $650
million. If the defendants’ objections to certain of these claims are denied,
Robbins Geller will seek entry of judgment in favor of these claimants as
well.

At trial, the plaintiffs presented evidence to the jury that Household
International’s growth and revenues were driven by systemic and company-wide
predatory lending practices. Household International’s fraud included
misrepresenting interest rates, charging prepayment penalties in violation of
state law and hiding prepayment penalties in the loan terms, packing the loans
with insurance that the borrowers did not need or want, charging the borrowers
excessive fees or points, and “loan splitting” – unnecessarily splitting one
loan into two so the borrower was forced to pay a higher, noncompetitive rate
on the first loan. After reviewing evidence of the defendants’ predatory
lending practices, attorneys general from 19 states jointly concluded that the
defendants engaged in widespread “insidiously deceptive sales practices.”

The plaintiffs also presented evidence that the defendants manipulated the
credit quality of Household International’s loan portfolio to conceal the true
level of delinquencies and mask the poor quality of its loans. At trial,
Household International’s former CEO, William Aldinger, admitted under oath
that the disclosures in its 2001 Form 10-K were materially false and
misleading.

In support of their case, the plaintiffs showed that defendants had a motive
to commit fraud, including evidence that defendants Aldinger and Gilmer sold
their Household International stock while the price was artificially inflated,
netting $19 million and $3 million, respectively. The plaintiffs also
presented evidence that defendants destroyed documents to cover up their
fraud.

“The fact that, after 11 years of hard-fought litigation, we obtained the
largest judgment ever in a securities fraud trial demonstrates our firm’s
resolve to vindicate the rights of defrauded investors,” said the plaintiffs’
lead trial attorney, Mike Dowd. “With my partners Spence Burkholz, Dan Drosman
and Luke Brooks, we were able to show the jury overwhelming evidence of the
defendants’ fraud and demonstrate how investors suffered as a result. We moved
about 20 attorneys and support staff to Chicago for over two months in 2009,
and I’m glad their hard work paid off for the class.”

The case, Lawrence E. Jaffe Pension Plan v. Household International, Inc., et
al., Case No. 02-C-5893, is pending in the United States District Court for
the Northern District of Illinois. The lead plaintiffs are Glickenhaus & Co.,
PACE Industry Union-Management Pension Fund, and International Union of
Operating Engineers Local No. 132 Pension Plan. Robbins Geller, lead counsel
in this record-breaking recovery, represents U.S. and international
institutional investors in contingency-based securities and corporate
litigation. With nearly 200 lawyers in nine offices, the firm represents
hundreds of public and multi-employer pension funds with combined assets under
management in excess of $2 trillion. The firm has obtained many of the largest
recoveries in history and has been ranked number one in the number of
shareholder class action recoveries in MSCI’s Top SCAS 50 every year since
2003. Please visit http://www.rgrdlaw.com for more information.

Contact:

Robbins Geller Rudman & Dowd LLP
Michael J. Dowd
Spencer A. Burkholz
619-231-1058
 
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