NEW YORK - (Mealey's) The comptroller of the State of New York has reached a $168 million settlement with National City Corp. and certain of its current and former officers and directors, settling claims that the financial holding giant misrepresented the "quality of its mortgages and home equity loans and the severity of its losses to investors," according to a press release issued Aug. 8 (In re National City Corp. Securities, Derivative & ERISA Litigation, No. 08-7000, N.D. Ohio).
According to the press release, which was issued by New York State Comptroller Thomas P. DiNapoli as trustee of the New York State Common Retirement Fund, defendants National City, CEO Peter E. Raskind, former CEO David A. Daberko, Chief Financial Officer Jeffrey D. Kelly, Senior Vice President and Treasurer Thomas A. Richlovsky, Chief Credit Officer Robert C. Rowe, former Chief Risk Officer James R. Bell III and nine members of the National City board of directors will pay $168 million to settle claims that National City violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11 and 15 of the Securities Act of 1933 by issuing a series of false and misleading statements regarding the "quality of its mortgages and home equity loans and the severity of its losses to investors."
In particular, DiNapoli claims that the defendants misrepresented the quality of $100 billion to $120 billion National City held in commercial real estate loans, consumer loans and residential real estate loans, which included home equity lines of credit, which were subprime first- and second-lien mortgages.
DiNapoli sued the defendants in the U.S. District Court for the Northern District of Ohio on behalf of a class of investors that purchased National City common stock from April 30, 2007, to April 21, 2008, as well as a subclass of investors that purchased National City stock pursuant to a Securities and Exchange Commission registration statement in connection with National City's acquisition of NAF Bancorp, Inc. "on or about Sept. 1, 2007."
According to the press release, as part of the proposed settlement, which is subject to court approval, the defendants have made no admission of wrongdoing.
[Editor's Note: Full coverage will be in the August issue of the LexisNexis Financial Services Litigation Report. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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