Wilmington Trust fraud lawsuit is now a class action
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(Reuters) — Former Wilmington Trust Co. shareholders may pursue their securities fraud lawsuit over mounting loan losses that led to the company's discounted sale to M&T Bank Corp. as a class action, a Delaware federal judge ruled Thursday.
U.S. District Judge Sue Robinson in Wilmington agreed with the plaintiffs that there is a common means to calculate damages from Wilmington's alleged concealing of several hundred million dollars worth of troubled construction loans and commercial mortgages in 2009 and 2010.
Class actions let plaintiffs sue as a group, and can lead to larger recoveries and lower costs than individual lawsuits.
Mounting loan losses led to Wilmington's Nov. 1, 2010, agreement to sell itself to Buffalo, New York-based M&T Bank Corp. at a 46% discount to its market value, ending more than a century in business.
Several pension funds are leading the Wilmington lawsuit, which covers shareholders from Jan. 18, 2008, to Nov. 1, 2010.
Thomas Allingham, a lawyer representing Wilmington and several individual defendants including former Chief Executive Ted Cecala and President Robert Harra, declined to comment. M&T spokesman Michael Zabel also declined to comment.
Four former Wilmington executives, including Mr. Harra, were criminally charged on Aug. 5 with lying to regulators about the health of the bank's loans.
Mr. Harra pleaded not guilty on Aug. 20. Mr. Cecala has not been criminally charged.
Wilmington last September agreed to pay $18.5 million to settle U.S. Securities and Exchange Commission civil charges that it concealed delinquent loans and did not set aside enough money for loan losses.
The case is In re: Wilmington Trust Securities Litigation, U.S. District Court, District of Delaware, No. 10-00990.
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