On Oct. 2, 2002, Comerica announced that it would record a charge to earnings comprised of an increase in the provision for loan loss reserves and a reduction in goodwill related to a decline in the value of Comerica’s California subsidiary, Munder Capital Management. The company also disclosed a restatement of its financial results for the second quarter of 2002 to reflect additional loan loss reserves relating to Munder.
In their complaint, the plaintiffs alleged that Comerica issued public statements that were materially false and misleading in violation of Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the plaintiffs alleged that the defendants issued materially false and misleading quarterly reports with the Securities and Exchange Commission that failed to properly disclose the poor financial condition of Comerica’s loan portfolio regarding loans in the bank’s California subsidiary, Munder Capital, that did not satisfy generally accepted account principles. The complaint alleged that these statements caused Comerica’s share price to be inflated artificially, causing damages to persons who purchased or acquired Comerica’s common stock at such inflated prices.
The parties agreed to settle the case for $15 million.
Type of action: Securities fraud class action
Type of injuries: Fraudulent representations in connection with SEC Quarterly filings
Name of case: Kasner v. Comerica, Inc.
Court/case no./date: U.S. District Court for the Eastern District of Michigan; #02-60233; Nov. 29, 2005
Name of judge: Marianne O. Battani
Settlement amount: $15 million
Attorneys for the plaintiff: E. Powell Miller; Marc L. Newman; Barry A. Weprin
Attorney for the defendant: Withheld