According to a press release dated November 22, 2005, Fifth Third Bancorp disclosed late Friday that a court had approved a $ 17 million settlement of a class action related to the Cincinnati company's April 2001 acquisition of Old Kent Financial Corp. The suit was filed in March 2003 in the United States District Court for the Southern District of Ohio. The settlement was approved Nov. 14.
In a press release dated May 17, 2005, Scott + Scott, LLC announced today that Fifth Third Bancorp has agreed to amend the federal securities settlement that it previously announced on April 1, 2005, to make it clear that claims brought under the Employee Retirement Income Security Act (ERISA) on behalf of employee and retiree participants in the Company's 401(k) plan will not be covered by the securities settlement. The ERISA claims are the subject of a separate class action lawsuit against Fifth Third Bancorp. Today's announcement affects current and former Fifth Third employees who have funds invested in the Fifth Third Master Profit Sharing Plan.
In a press release dated April 1, 2005, Fifth Third Bancorp said it settled a class action lawsuit brought on behalf of purchasers of its stock. In a Securities and Exchange Commission filing, Fifth Third said that subject to court approval, the settlement provides that Fifth Third's insurer and other parties will pay a total of $17 million to a fund to settle the claims with the class members.
The original complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between September 21, 2001 to January 31, 2003. The Complaint alleges, among other things, that Fifth Third issued press releases and filed financial reports with the SEC which represented that the Company had successfully and seamlessly integrated a large corporate acquisition (Old Kent) into its operations and further represented that its business was stronger than ever and that the Company would continue to grow and provide investment-safety. According to the complaint, these statements were materially false and misleading because they failed to disclose that the Old Kent (and other) merger(s) seriously strained the Company's infrastructure, causing deficiencies in its internal controls and other business-critical systems. The alleged motive in this action was the Company's plan to acquire a Tennessee-based bank using FifthThird stock as currency. On September 10, 2002, the Company announced that it would be taking a $54 million after-tax ($81.8 million pre-tax) charge for impaired funds, resulting from a botched accounting reconciliation. According to the complaint, the Company played down the incident as a one-time immaterial event, which was false and misleading because, according to the complaint, it was symptomatic of material, company-wide infrastructure deficiencies. On November 14, 2002 the Company revealed that the write-off had triggered investigations by banking regulators and the SEC. According to the Complaint, the Company continued to insist, falsely, that its controls were adequate. On January 31, 2003, the Company reported that banking regulators would likely take formal action against the Company, which would likely require Fifth Third to improve its internal controls by, among other things, adding personnel and processes. On February 3, 2003, the first trading day following the announcement, the price of Fifth Third common stock closed at $52.21 per share, a decline of 15% from the closing price on November 14, 2002 close of $62.53, the day that Fifth Third first revealed that it was being investigated by banking regulators and the SEC.