Washington Mutual, Inc., the former owner of the biggest U.S. bank to fail during the credit crisis, has entered into a preliminary settlement of the securities class action pending against the company and related defendants in the W.D. of Washington. The suit alleges that Washington Mutual mislead investors about the nature and riskiness of its loan portfolio. The company filed for bankruptcy in September 2008 after its banking unit was taken over by federal regulators and sold to JPMorgan Chase.
The settlement is for $208.5 million ($105 million from the company’s insurers, $85 million from the company’s underwriters, and $18.5 million from the company’s outside auditor). According to press reports, however, if all eligible common shareholders participate in the settlement they will only receive 5 cents per damaged share. The Seattle Times has a lengthy article on the settlement.