National City Bank resolves securities, derivative, and ERISA litigation arising from dislocations in credit and real-estate markets

Client(s) National City Bank

Jones Day represented National City Corporation (subsequently acquired by PNC) and a group of its current and former officers and directors in a number of related cases arising out of the dislocations in the real-estate and mortgage markets in 2007 and 2008. National City is one of the United States' largest bank holding companies, with over 1,400 branches in nine states and a nationwide mortgage lending business. Beginning in the summer of 2007, National City announced substantial increases in its loan-loss reserves for various residential real estate portfolios, announced it was closing its indirect home equity lending line of business, and transferred over $4 billion of loans from its held-for-sale warehouse to its portfolio. Continuing increases in loan delinquencies and charge-offs led to an erosion in the company's liquidity and capital, leading it to enter into a $7 billion recapitalization transaction in April 2008. As a result of the very substantial (90% +) stock price declines over that period, defendants have been sued by several categories of shareholders: 1) open-market purchasers of stock have filed suit under Section 10(b) of the Securities Exchange Act and Rule 10b-5; 2) participants in the company's 401(k) plan who invested in company stock have sued under ERISA; 3) shareholders have filed derivative breach of fiduciary duty suits against individual officers and directors; and 4) shareholders of three bank holding companies that National City acquired during 2006 and 2007 have sued under Section 11 of the Securities Act, seeking rescissory relief. We represent the defendants in all of these actions, all of which were filed during 2008 and are currently pending.

Securities, Derivative and ERISA Litigation (N.D. Ohio)