U.S. Markets closed

Banks pull out of lawsuit vs. Target, Trustwave over data breach

The sign outside the Target store is seen in Arvada, Colorado January 10, 2014. REUTERS/Rick Wilking

(Reuters) - Two U.S. banks that sued Target Corp and credit card security firm Trustwave Holdings Inc over responsibility for one of the largest data breaches on record have at least for now dropped their lawsuit.

Trustmark National Bank, which is based in New York, and Houston-based Green Bank NA said they would dismiss their cases "without prejudice to re-filing," according to filings on Friday and Monday in the federal court in Chicago.

The banks had accused Target and Trustwave of failing to properly secure customer data, leading to the theft of about 40 million payment card records and 70 million other records during last year's holiday shopping season.

But on Saturday, Trustwave Chief Executive Robert McCullen told clients saying that Target did not outsource data security to his Chicago-based company, and that Trustwave did not monitor Target's network or process its cardholder data.

Agreements with information technology services companies are often kept confidential, and neither Target nor Trustwave would confirm whether the companies have been partners.

Panagiotis Albanis, a lawyer for Trustmark and Green Bank, did not immediately respond on Tuesday to requests for comment.

Trustmark and Green Bank had accused Trustwave of having failed to bring Target's computer systems up to industry standards, and as late as September 20 finding "no vulnerabilities."

The lawsuit said the breach cost banks money from having to correct fraudulent charges and reissue cards, and that the industry could end up owing more than $1 billion.

The case is Trustmark National Bank et al v. Target Corp et al, U.S. District Court, Northern District of Illinois, No. 14-02069.

(Reporting by Jonathan Stempel in New York; editing by Andrew Hay)