WaMu settles class action suit for $208.5 million
Saturday, July 2, 2011
LOS ANGELES (AP) — Washington Mutual Inc. and its fellow defendants have agreed to pay $208.5 million to settle a class-action lawsuit stemming from the lender’s collapse in 2008, the biggest U.S. bank failure in history.
The defendants and lead plaintiff Ontario Teachers’ Pension Plan Board outlined the terms of the agreement in documents filed with U.S. District Court in Seattle on Thursday.
The pact calls for Washington Mutual to pay $105 million, for a group of underwriters that includes Goldman, Sachs & Co., to pay $85 million, and for Deloitte & Touche LLP to kick in another $18.5 million. In exchange, the plaintiffs have agreed to dismiss all claims against the lender and its co-defendants.
The settlement must be approved by a bankruptcy court overseeing Washington Mutual’s reorganization plan.
In 2008, the federal government seized WMI’s flagship bank, based in Seattle, and sold its assets to JPMorgan Chase & Co. for $1.9 billion.
Plaintiffs ranging from huge pension funds to small individual investigators accused WMI and its banking executives of securities fraud, claiming the bank’s lending standards and practices were misrepresented, questionable business practices were not disclosed and federal financial reports were misleading.
The Ontario teachers’ pension fund has claimed it lost $24 million from alleged wrongdoing by WMI and the other defendants.
Under the terms of the settlement deal, WMI and the other defendants did not admit any wrongdoing.
Last month, WMI scrapped a proposed bankruptcy reorganization plan after negotiations to resolve shareholders’ objections failed. The company’s current reorganization will be subject to a confirmation hearing starting next week.