Washington Mutual settles investor class action lawsuit

Posted on: July 14th, 2011 by Steve Larson
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Washington Mutual Inc. the former owner of the biggest bank to fail, and its former executives, underwriters and auditor reached a $208.5 million settlement of a class-action lawsuit by investors.  The settlement provides for $105 million in payments on behalf of the individual defendants, $85 million from the underwriters, and $18.5 million from Deloitte & Touche LLP, according to a request for preliminary approval filed yesterday in federal court in Seattle by lawyers for the Ontario Teachers’ Pension Plan Board, the lead plaintiff in the case.

The lawsuit consolidates more than 20 cases claiming the bank secretly lowered lending standards, artificially inflated home-price appraisals and failed to disclose its deteriorating financial condition when the loans began to fail.

Washington Mutual, based in Seattle, filed for bankruptcy on Sept. 26, 2008, the day after its banking unit was taken over by regulators and sold to JPMorgan Chase & Co. for $1.9 billion. It was the biggest bank to fail in U.S. history, with more than 2,200 branches and $188 billion in deposits.

The case is In re Washington Mutual Inc. Securities, Derivative & ERISA Litigation, 2:08-md-01919, U.S. District Court, Western District of Washington (Seattle).