Former executives of Bear Stearns Cos. (now owned by J.P. Morgan Chase) have agreed to a preliminary settlement of the securities class action pending against them in the S.D.N.Y. The case, originally filed in 2008, accuses the executives of misleading investors about the firm’s business and financial well-being in the run-up to the credit crisis. The settlement comes after the denial of the defendants’ motion to dismiss, but before class certification.
The settlement is for $275 million, making it one of the top 40 largest securities class action settlements since 1995 (as stated in the court filing). According to the Wall Street Journal (subscrip. req’d), however, the executives will not have to make any personal payments. Instead, the settlement amount will come from a $9 billion fund created by J.P. Morgan Chase to cover Bear Stearns-related litigation and other expenses.