E*Trade to settle class action lawsuit
(Reuters) - E*Trade Financial and its insurers have agreed in principle to pay $79 million to settle class action lawsuits brought against the online brokerage as a result of losses in its mortgage and home equity loans portfolio in 2007.
E*Trade was sued by investors who alleged the company violated securities law and breached its fiduciary duty to shareholders in relation to the massive losses it suffered following the collapse of the subprime mortgage market.
The company said the losses incurred were caused by a "worldwide economic catastrophe" and that the corporation did not break the law. It stuck by its position on Wednesday.
"We continue to believe the claims are without merit," a company spokesman said in a statement.
"We are committed to moving forward and executing management's business strategy, a part of which is to continue to remove the burdens placed on the company during the financial crisis. We look forward to putting this matter behind us."
E*Trade's portion of the settlement payment is around $10.75 million and will be reflected as an expense in the current quarter.
The agreement in principle requires court approval to become final. A definitive agreement is expected in the first quarter of 2012.
(Reporting by John McCrank in New York; Editing by Phil Berlowitz)