HSBC Holdings has agreed to pay $1.575bn to settle a class action lawsuit stemming from its purchase of consumer finance business Household International.
HSBC Finance, previously known as Household International, expects to take a pre-tax charge of about $585m in the second quarter for the settlement. The bank said that the settlement price was less than its estimated exposure of up to $3.6bn.
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The settlement averts a second jury trial that was expected to start in a federal court in Chicago.
Investors of Household filed the lawsuit in 2002, accusing the company of inflating its share price by hiding bad lending practices.
The British lender started defending the claims after acquiring Household in a deal worth about $14.2bn in 2003.
In October 2013, shareholders won a $2.46bn judgment against HSBC. However, in May 2015 HSBC won a new trial to determine whether other nonfraud factors led to the drop in Household's share price.
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