Robbins Geller Prevails in 14-Year Household Securities Class Action with Record $1.575 Billion Recovery
On October 20, 2016, after 14 years of tireless litigation, Robbins Geller obtained final approval of a record-breaking $1.575 billion recovery in the Household International (now HSBC Finance Corporation) securities class action. The impressive recovery is not only the largest ever following a securities fraud class action trial; it is also the largest securities fraud settlement in the Seventh Circuit and the seventh-largest settlement ever in a post-PSLRA securities fraud case.
The case was first filed on August 19, 2002, with shareholders alleging that Household stock was artificially inflated due to the concealment of its poor lending practices and loan quality. On May 7, 2009, a jury returned a securities fraud verdict in favor of the class, finding that Household and the individual defendants collectively made 17 false and misleading statements concerning the lender’s financial results and operations in violation of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Robbins Geller fought the defendants’ repeated attempts to derail the litigation after the verdict, which included several post-trial motions to invalidate the verdict, objections to tens of thousands of claims by injured class members, and an appeal to the Seventh Circuit Court of Appeals.
On May 21, 2015, the Seventh Circuit upheld the jury’s verdict that defendants made false or misleading statements of material fact about the company’s predatory lending practices, the quality of its loan portfolio and the company’s financial results between the period of March 23, 2001 and October 11, 2002. The case was then remanded for a retrial to focus on whether the individual defendants made certain false statements, whether those false statements caused plaintiffs’ losses, and the amount of damages. The $1.575 billion recovery was reached just hours before the second trial was scheduled to begin. In 2009, the Firm moved 21 lawyers and legal professionals to Chicago for the trial. In May 2016, 14 attorneys, forensic accountants and legal professionals again moved to Chicago for a second trial of the case. Overall, the Firm devoted approximately 130,000 hours to the case and took more than 85 depositions. As of October 20, the settlement has now been granted final approval, thus successfully ending a long, complicated trial for Household shareholders.
“The fact that after 14 years of litigation, we obtained the largest recovery following a securities class action trial demonstrates our Firm’s resolve to vindicate the rights of defrauded investors,” said Robbins Geller lead trial attorney Michael J. Dowd. “Our achievement in this case is unprecedented. We took a low profile securities case and turned it into the seventh-largest securities recovery ever. We fought like animals for the class and recovered $1.575 billion. We obtained this recovery because of our ingenuity, our creativity, our ability and willingness to try cases and, more than anything, our commitment to the class.”
In approving the settlement, the court noted that Robbins Geller faced “significant hurdles” and “uphill battles” throughout the case and estimated that the Firm’s “chances of prevailing at the second trial to be at best 50/50, more likely closer to 25/75.” The court further commented that “[c]lass counsel performed a very high-quality legal work in the context of a thorny case in which the state of the law has been and is in flux. [Robbins Geller] achieved an exceptionally significant recovery for the class. And the Court agrees . . . that it was, in fact, a spectacular result for the class.”
Jaffe v. Household Int’l, Inc., No. 02-C-05893 (N.D. Ill.).
Read More Firm News
- August 4, 2021
- July 30, 2021
- Paul Geller and Leadership Committee Honored as “Litigators of the Week” Upon Announcement of Historic $26 Billion Settlement in Opioid LitigationJuly 23, 2021
- June 22, 2021
- Robbins Geller Obtains Ninth Circuit Decision Vacating District Court’s Judgment Dismissing Complaint Against Google and AlphabetJune 16, 2021