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More than 425 boxes of documents which may shed light on HSBC’s subprime woes of past and present were recently discovered gathering dust in a warehouse.They surfaced in a U.S. class-action lawsuit against HSBC Finance, formerly Household International, in which investors claim damages from its subprime lending practices. The lawsuit claims the company’s stock came under pressure when those practices were disclosed, harming shareholders.
The investors sued Household in federal court in 2002, before HSBC bought the U.S. consumer finance company for $14.2 billion in 2003.
The investors hope the boxes, containing more than 120,000 pages, will bolster their claims that Household’s then-senior management orchestrated a scheme to prey on consumers with illicit subprime lending practices and are insisting that the bank make them available for review.
HSBC Finance denies that allegation. It is also resisting producing the documents, saying that the bank has already fully complied with its discovery obligations in the case.
The documents were generated by consultant Ernst & Young LLP, hired by Household to monitor its lending practices. The engagement came after Household agreed in 2002 to pay $484 million to settle consumer complaints.
Ernst & Young’s duties were of a watchdog variety, examining whether consumers were overcharged via administrative fees and penalties for early repayment of loans, for example, court records show. The consultant also ran a “secret shopper” program to monitor whether consumers were treated fairly during loan closings.
Lawyers for the investors who are suing the bank said this week they just learnt about the boxes of documents from Ernst & Young and accused Household of concealing them. HSBC Finance’s lawyers say the documents were never requested. HSBC Finance declined further comment.
This article, HSBC Withholds Documents In Latest Lawsuit, is just one of our articles from Bank Horror Stories, HSBC Secrets
Bank Horror Stories monitors banking problems and customer complaints and has done so since 1999. Writers hold no stock positions. Some material is used under the fair use copyright act.
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One Comment
we are victims also of hfc we are fuming mad just dont know what to do about it hfc has flipped our loan 3 times told us he was a finacial planner how he can help us help us bury ourselves!!!!! it needs to stop