E*TRADE (ETFC) Enters MoU to Settle the Freudenberg Action; Will Pay $10.75M for Full Releases
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E*TRADE (Nasdaq: ETC) has entered into a memorandum of understanding agreeing to settle class action lawsuits alleging violations of the federal securities laws by E*TRADE and several of its former executives.
The Freudenberg Action, as well as several consolidated lawsuits, were commenced in October 2007 after the Company experienced losses in its portfolio of mortgages and home equity loans. The agreement in principle, which requires court approval to become final, calls for the Company and its insurance carriers to make a settlement payment of $79 million, of which approximately $10.75 million will be paid by E*TRADE, in return for full releases. The defendants continue to deny that they committed any violations of law or breached any fiduciary duty to shareholders. E*TRADE’s portion of the settlement payment will be reflected as an expense in the fourth quarter of 2011. The parties expect to enter into definitive agreements and seek court approval during the first quarter of 2012.
The Freudenberg Action, as well as several consolidated lawsuits, were commenced in October 2007 after the Company experienced losses in its portfolio of mortgages and home equity loans. The agreement in principle, which requires court approval to become final, calls for the Company and its insurance carriers to make a settlement payment of $79 million, of which approximately $10.75 million will be paid by E*TRADE, in return for full releases. The defendants continue to deny that they committed any violations of law or breached any fiduciary duty to shareholders. E*TRADE’s portion of the settlement payment will be reflected as an expense in the fourth quarter of 2011. The parties expect to enter into definitive agreements and seek court approval during the first quarter of 2012.
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