Bear Stearns and auditor Deloitte will pay former shareholders in the failed investment bank $274.9 million to settle litigation from the Michigan Attorney General Bill Schuette.
Schuette sued both companies in 2008 on behalf of the State of Michigan Retirement Systems and other investors nationwide. The suit claimed Bear and Deloitte misled investors on the value and risks of the bank’s mortgage bonds backed mostly by subprime home loans.
Refusing to mark down the bonds triggered its stock decline and ultimately its sale to JPMorgan Chase (JPM). The class-action suit covered investors who bought Bear Stearns stock between Dec. 14, 2006 and March 14, 2008.
Bear stock dropped to $30 at the end of this period from a high of $172.61, according to the Chase first quarter financial filing. Chase famously bought Bear Stearns for $2 per share during the height of the financial crisis.
“This is good news for Michigan taxpayers,” Schuette said in a statement. “This settlement demonstrates our commitment to holding accountable any bank or investment firm that violates the public trust.”
The final hearing on the settlement is scheduled for Sept. 19 in the Southern District Court of New York.