E*Trade Financial Corp. and its insurers have agreed to pay $79 million to settle a class-action suit brought by investors over losses in its mortgage and home-equity loan portfolios.
The online brokerage and banking company said in a regulatory filing Wednesday that it will pay almost $10.8 million of the settlement, which still needs court approval. This amount will be reflected as an expense in the fourth quarter. E*Trade agreed to the settlement without admitting wrongdoing.
The suit, brought in October 2007, alleged that E*Trade and several of its former executives violated federal securities laws and breached their fiduciary duty to shareholders by hiding potential losses related to subprime mortgages.
Banks have been working to settle claims regarding alleged wrongdoing regarding mortgages. Earlier this month Bank of America Corp. agreed to pay $315 million to settle claims that its Merrill Lynch unit made false and misleading statements about the quality of its mortgage-backed securities. A judge also recently rejected a $285 million settlement Citigroup had reached with the Securities and Exchange Commission.