Great Western, parent of the nation’s second largest savings and loan, still faces similar lawsuits alleging it duped people into moving their money from federally insured savings accounts to mutual funds.
The company admitted no wrongdoing in settling the twin class-action suits in Los Angeles state and federal courts. The settlement won tentative approval Monday from U.S. District Judge Irving Hill; an April 14 final approval hearing was set.
Class actions are still pending in Florida and California. Among the plaintiffs in California is widow Ruby Rosenthal, 96, who says she lost $8,000 after a salesperson promised she could double the returns she was earning on a $60,000 certificate of deposit.
“They’re waiting for me to die, but they better not hold their breath,” Mrs. Rosenthal said in a news release issued by her lawyer.
Alan Schulman of San Diego, the lead lawyer in the California class actions, was pleased with the settlement given the advanced age of many of the class members and the possibility of a long trial and appeals.
Great Western set aside $8 million last quarter to help settle the California class-action suits. Insurance will cover the rest of the $17.2 million.
Great Western has maintained that the risks were fully disclosed to investors in the funds. It also has said that investors who hung onto the bond mutual funds recouped their losses when the bond market recovered in 1995.
The suits — covering April 13, 1992, through April 13, 1995 — were filed on behalf of tens of thousands of Californians. The investors mainly bought funds that held Treasury bonds, along with a few corporate bond funds.
They accused Great Western Bank of steering CD holders into the mutual funds of a sister company, Great Western Financial Securities, so the parent company could make more money. Great Western imposed a 4 1/2 percent initial sales commission and 1 1/2 percent a year in fees on the mutual funds.
The settlement will be divided among those who either lost money when they sold the bond funds after a 1994 downturn in the bond market, or made less than the 4 percent they would have earned from CDs.