A federal judge has signed off on the remaining $36.6 million payment that PNC Financial Services Group will make to shareholders to settle a class-action lawsuit.
The suit arose from a 2001 accounting scandal at PNC, which had attempted to unload more than $760 million in bad loans. The company had sold those loans to three partnerships it created with insurer AIG, removing them from its balance sheet, but failing to take depreciation of the bad assets into account. The Federal Reserve forced PNC to restate its 2001 earnings by about $150 million less than originally reported.
The total settlement stands at about $193 million -- with PNC contributing about $90 million and another $44 million coming from AIG. Other insurance companies covered the remainder. PNC paid $25 million to the Justice Department to settle charges of conspiracy to commit securities fraud filed back in June 2003.
Another lawsuit is still pending against Ernst & Young, which reviewed the bank's loan sales.
Previously on WebCPA:
PNC Accounting Case May Be Settled for $193M (Aug. 16, 2005)
Report: E&Y Faces SEC Probe over PNC Financing (Dec. 8, 2005)
WSJ: E&Y Played Dual Role in PNC (Feb. 1, 2002)
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