The proposed settlement, if accepted, will close the case, which was brought on behalf of purchasers of CIT securities from 12 December 2006 to 5 March 2008 and the amount will be distributed among class members.
The proposed agreement quoted by Reuters said, "Given the complexities and the continued risk the parties would face if the litigation were to proceed, the settlement represents a reasonable resolution to the parties’ disputes and eliminates the risk that the settlement class might recover nothing, or a vastly smaller amount, following trial and inevitable appeals."
The commercial lender became bankrupt in November 2009, when it sustained huge loses and in 2010 the company emerged from the crisis with the help of a prepackaged reorganization.
CIT’s bankruptcy filing washed the government’s $2.3bn in bailout money, which it had infused into CIT in December 2008.
The main petitioner in the case is Pensioenfonds Horeca & Catering, a pension fund for the Dutch hospitality and catering industry while the defendant in the lawsuit is former CIT Chief Executive Jeffrey Peek.
CIT was accused for failing to disclose a lowering of credit standards, misrepresenting the performance of subprime mortgage and student loan portfolios as reported by Reuters.
