HSBC Holdings Plc, already facing a $2.46 billion judgment in an 11-year-old securities-fraud case, must keep litigating claims as a U.S. judge ordered more exchanges of evidence for a potential follow-up trial.
A federal jury in Chicago ruled in 2009 that executives at Household International, now part of HSBC Finance Corp., misled investors, violating U.S. securities laws. After a four-year claims review process, U.S. District Judge Ronald Guzman last week entered a $2.46 billion judgment on some claims.
Today, the judge ordered the parties to produce a schedule for developing evidence, a process known as discovery, to resolve about 200 more claims.
Guzman rejected a request by defense attorney Mark E. Rakoczy to delay the discovery process until a federal appeals court rules on the bank’s challenge to the trial’s outcome.
“Eleven years is a long time,” the judge said. He also predicted that the appellate court would issue its ruling before the remaining claims were ready to be tried. “Let’s move forward with discovery.”
Mike Dowd, a plaintiffs’ lawyer, today told Guzman there remains a pool of 16,000 claims that are still in dispute. Dowd said those claims are worth about $550 million, while he acknowledged that this number is also being disputed.
A group of 6,500 claims, to which there are no objections, will be paid, Dowd said, while about 9,500 more will be placed on a rejected list because of the claimants’ failure to respond to additional inquiries.
Household was acquired by London-based HSBC in March 2003 for $15.5 billion.
The case is Lawrence E. Jaffe Pension Plan v. Household International Inc., 02-cv-05893, U.S. District Court, Northern District of Illinois (Chicago).
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