HSBC Finance Corporation (HSBC Finance) has agreed to pay $1.58 billion to resolve a securities fraud class action which stemmed from the bank’s takeover of a US sub-prime lender, Household International, over a decade ago.

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The 14-year-old lawsuit by Household’s shareholders alleged that the company and some of the company’s executives had made false and misleading statements that inflated the company’s share price.

Misleading Statements

The lawsuit also alleged that Household, now known as HSBC Finance, had failed to disclose the quality of its loan portfolio. Just before the HSBC acquisition, Household had agreed to settle $484 million legal charges after using predatory borrowing practices in several US states to deceive customers into paying extraordinarily high interest rates. The agreement to settle the legal charges led a decline in Household’s share price by more than 50% from mid-2001 to October 2002.

The settlement reached yesterday was lower than a $2.5 billion judgment against some claims entered in 2013, and far lower than HSBC’s estimated exposure of up to $3.6 billion. However, it still ranks as the largest ever following a class-action trial for securities fraud.

A spokesman for HSBC, Rob Sherman, commented, “We are pleased to resolve this 14-year case that’s based on events that took place before HSBC acquired Household.”

James Glickenhaus of Glickenhaus & Co, one of three lead plaintiffs added, “The mills of justice grind slowly, but sometimes they do grind exceedingly fine.”

HSBC, which acquired Household for a sum in the region of $14.2 billion, achieved profits to the sum of nearly $10 billion in profits in the first few years following the takeover. However, the bad loans from the acquisition started to increase in 2006, forcing HSBC to close the majority of its US consumer finance business after being hit by the financial crisis in 2009.