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HSBC ordered to pay out $2.5bn after losing sub-prime lawsuit

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  • 18/10/2013
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HSBC ordered to pay out $2.5bn after losing sub-prime lawsuit
HSBC has been ordered to pay out $2.46bn by a US court after it lost a class action lawsuit against Household International, the lender it bought pre-crisis.

The lawsuit filed in 2002 alleged Household, its chief executive, chief financial officer and head of consumer lending made false and misleading statements that inflated the company’s share price.

HSBC also claimed Household artificially boosted its share price by engaging in predatory lending and hid the poor quality of its loan portfolio and its financial accounting from March 2001 to October 2002, the FT reports.

HSBC bought Household International in November 2002 for $14bn, a year after reports first emerged of the US lender’s allegedly dubious lending practices. It was HSBC’s most high-profile US mishap – in the sub-prime crisis Household International’s collapse left the bank with billions of dollars in losses.

The bank said it would appeal the ruling. “It has been noted in our filings for some time,” a spokesperson said. “This is the next step in an 11-year-old case and we believe we have a strong argument.”

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