The Associated Press is reporting that the shareholders who sued Wilmington Trust are asking a federal judge to approve a proposed $210M bank fraud settlement reached with the bank. The plaintiffs contend that the bank fraudulently hid billions of dollars in bad loans while bank officials misled investors and regulators about overdue commercial real estate loans prior to its sale to M & T Bank Corp. (MTB) several years ago.
As part of the settlement, Wilmington Trust would pay $200M. KPMG, an auditing firm, would pay $10M.
The wrongdoing alleged in the shareholder lawsuit addresses a longer time period than what was noted in a parallel criminal case, in which four ex-Wilmington Trust executives were convicted on conspiracy and fraud charges. Wilmington Trust is the only financial institution to be subject to criminal charges related to TARP (Troubled Asset Relief Program) to date.