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First Niagara and KeyCorp banks settle shareholder lawsuits

KeyCorp and First Niagara Financial Group said they have settled class-action lawsuits filed in New York State by First Niagara shareholders after Key announced plans to acquire First Niagara.

The two banks agreed to disclose additional information about the process that led to the agreement between the two banks. The settlement still needs approval in State Supreme Court, said David Lanzillo, a First Niagara spokesman.

First Niagara and Key said they “deny all of the allegations made by the plaintiffs (in the suit) and believe the disclosures in the joint proxy statement are adequate under the law. Nevertheless, First Niagara, KeyCorp and the other defendants have agreed to settle the actions in order to avoid the costs, disruption and distraction of further litigation.”

As part of the agreement, the plaintiffs can apply to the court for an award of “reasonable attorneys’ fees, costs and expenses to be paid by First Niagara, its successor in interest and/or its insurer.”

The two banks said the settlement will not affect what First Niagara shareholders would be paid under the deal, nor alter the banks’ plans for special shareholder meetings on March 23.

A lawsuit filed last fall called the sale process “flawed” and claimed that the acquisition price undervalued First Niagara.