U.S. District Judge Robert Sweet has given final approval to the $275 million settlement between former Bear Stearns Cos. shareholders and JPMorgan Chase & Co., which bought Bear Stearns in 2008 just as the investment bank faced financial collapse.
The settlement brings to a close years of litigation between Bear Stearns, former executives of the investment firm and investors led by representatives of Michigan’s state pension funds.
Bear Stearns first agreed to the all-cash $275 million settlement in June. The money, minus legal fees, will go to shareholders who accused the company of issuing “materially false and misleading statements” about its financial results. Bear Stearns’ auditor, Deloitte & Touche, agreed to pay $19.9 million.
Shareholders initially filed a series of lawsuits against Bear Stearns beginning in 2008. Among other things, the lead plaintiff in the case claimed that Bear Stearns management had masked the firm’s failing financial health during the last year and a half of existence. During that time, Bear Stearns saw the collapse of two internal hedge funds because of deteriorating mortgage securities. Those investments are now viewed by many financial experts as one of the first key signs of the financial crisis that was to come.