Litigation and Regulatory Matters

The following supplements, and should be read together with, the disclosure in Note 22, "Litigation and Regulatory Matters," in our 2014 Form 10-K. Only those matters with significant updates and new matters since our disclosure in our 2014 Form 10-K are reported herein.

In addition to the matters described below, and in our 2014 Form 10-K, in the ordinary course of business, we are routinely named as defendants in, or as parties to, various legal actions and proceedings relating to activities of our current and/or former operations. These legal actions and proceedings may include claims for substantial or indeterminate compensatory or punitive damages, or for injunctive relief. In the ordinary course of business, we also are subject to governmental and regulatory examinations, information-gathering requests, investigations and proceedings (both formal and informal), certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In connection with formal and informal inquiries by these regulators, we receive numerous requests, subpoenas and orders seeking documents, testimony and other information in connection with various aspects of our regulated activities.

In view of the inherent unpredictability of litigation and regulatory matters, particularly where the damages sought are substantial or indeterminate or when the proceedings or investigations are in the early stages, we cannot determine with any degree of certainty the timing or ultimate resolution of litigation and regulatory matters or the eventual loss, fines, penalties or business impact, if any, that may result. We establish reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. Once established, reserves are adjusted from time to time, as appropriate, in light of additional information. The actual costs of resolving litigation and regulatory matters, however, may be substantially higher than the amounts reserved for those matters.

Given the substantial or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of such matters, an adverse outcome in certain of these matters could have a material adverse effect on our consolidated financial statements in any particular quarterly or annual period. We currently are subject to a partial final judgment entered in October 2013 in the Securities Litigation (Jaffe v. Household International, Inc., et al. (N.D. Ill. No. 02 C5893)) in the amount of approximately $2.5 billion, which includes pre-judgment interest at the Prime Rate. Claims totaling approximately $625 million, prior to the imposition of pre-judgment interest, also remain pending that are still subject to objections not ruled on by the district court. Although the partial final judgment is on appeal, if the Appeals Court rejects or only partially accepts our arguments, the amount of damages in the action, based upon that partial final judgment, and other pending claims and the application of pre-judgment interest on those pending claims, may lie in the range from a relatively insignificant amount to an amount up to or exceeding $3.6 billion. There is no date certain for when a decision will be issued. A decision could be issued at any time. We continue to maintain a reserve for this matter in an amount that represents management's current estimate of probable loss.

Litigation - Continuing Operations

Lender- Placed Insurance Matters In April 2015, the court granted preliminary approval of the settlement reached by the parties in the Weller, et al. v. HSBC Mortgage Services, Inc., et al. (D. Col. No. 13-CV-00185) putative class action regarding lender placed flood insurance. Under the agreement, HSBC agreed to pay $1.8 million inclusive of claims, attorneys’ fees and administrative costs. The court has scheduled a final settlement approval hearing for October 2015.

Residential Funding Litigation In December 2013, Residential Funding Company, LLC (“RFC”) filed an action against Decision One Mortgage Company LLC (“Decision One”) in Minnesota state court relating to alleged losses RFC suffered as a result of its purchase of approximately 16,000 mortgage loans from Decision One from 2000 to 2007. The action subsequently was removed to the U.S. District Court for the District of Minnesota. RFC alleges claims for breach of contract for alleged breach of representations and warranties concerning the quality and characteristics of the mortgage loans and contractual indemnification for alleged losses incurred by RFC arising out of purported defects in loans that RFC purchased from Decision One and subsequently sold to third parties via whole loans or securitizations. This action is at a very early stage.

Benchmark Rate Litigation The court held a hearing on the motion to dismiss in the first quarter of 2015. We await a decision from the court.

Litigation - Discontinued Operations

Credit Card Litigation In the Speedy Stop Food Stores LLC v. Visa Inc. (Tex. Dist. Ct., Victoria City, No. 13-10-75377-A) case, the court granted plaintiff's motion for partial summary judgment on the issue of whether plaintiff has antitrust standing and denied defendants' motion for partial summary judgment on the same issue in April 2015. Discovery is proceeding.

Salveson v. JPMorgan Chase et al. (N.D.Cal. No. 13-CV-5816) The motion for reconsideration of the court's order granting defendants' motion to dismiss is fully briefed, and we await a decision from the court.

DeKalb County, et al. v. HSBC North America Holdings Inc., et al. In March 2015, the court denied the HSBC defendants' motion for summary judgment.

Telephone Consumer Protection Act Litigation The court granted final approval of the settlement on February 27, 2015 and issued a final order approving the settlement and dismissing the action on March 17, 2015. Appeals of the approval order have been dismissed, and settlement distributions will begin in May 2015.