Litigation and Regulatory Matters

The following supplements, and should be read together with, the disclosure in Note 20, "Litigation and Regulatory Matters," in our 2016 Form 10-K. Only matters with significant updates and new matters since our disclosure in our 2016 Form 10-K are reported herein.

In addition to the matters described below and in our 2016 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 legal matters, including litigation, governmental 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 such matters or the eventual loss, fines, penalties or business impact, if any, that may result. We establish reserves for litigation, governmental 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.

For the legal matters disclosed below, including litigation, governmental and regulatory matters, as well as for the legal matters discussed in Note 20, "Litigation and Regulatory Matters," in our 2016 Form 10-K as to which a loss in excess of accrued liability is reasonably possible in future periods and for which there is sufficient currently available information on the basis of which we believe we can make a reliable estimate, we believe a reasonable estimate could be as much as $390 million for HSBC Finance Corporation. The legal matters underlying this estimate of possible loss will change from time to time and actual results may differ significantly from this current estimate.

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.

Litigation - Continuing Operations

Mortgage Securitization Activity

As discussed in previous filings, in December 2016, we had an initial discussion with the U.S. Department of Justice ("DOJ"), wherein the DOJ stated its preliminary view that we are subject to liability under the Financial Industry Reform, Recovery and Enforcement Act in connection with certain RMBS securitizations from 2005 to 2007. In March 2017, we provided our response to the DOJ, which, amongst other things, outlined why we disagree with the DOJ's preliminary view. Discussions are ongoing.

Telephone Consumer Protection Act Litigation In March 2017, the putative class action Monteleone v. HSBC Finance Corporation, et al. was dismissed and consolidated with another putative class action pending in the U.S. District Court for the Central District of California and an amended complaint has been filed. Ahmed and Monteleone v. HSBC Bank USA, National Association and PHH Mortgage Corporation (Case 5:16-cv-02057). The new putative class action does not name HSBC Finance Corporation as a defendant.

Litigation - Discontinued Operations

Credit Card Litigation The U.S. Supreme Court denied the petition for writ of certiorari in March 2017.

Salveson v. JPMorgan Chase et al. Plaintiff filed a petition for writ of certiorari with the U.S. Supreme Court in March 2017.

Governmental and Regulatory Matters

Foreclosure Practices In March 2017, the monitor of the national mortgage settlement filed with the United States District Court for the District of Columbia his final Consumer Relief Report validating that our and our affiliates' obligation under the settlement to provide $370 million in consumer relief has been satisfied.