A former E.F. Hutton branch manager has...

A former E.F. Hutton branch manager has dropped a lawsuit claiming that he was libeled in the brokerage firm’s 1985 report about its elaborate check-kiting scheme, according to court papers. The out-of-court settlement negotiated in July by attorneys for John M. Pearce and Hutton was approved by U.S. District Judge Thomas Flannery in Washington. Terms of the agreement were not made public. The settlement was negotiated shortly after Pearce had lost his suit against former Atty. Gen. Griffin Bell, who had been hired by Hutton to investigate the check-kiting scheme and produce a report. Hutton, now part of Shearson Lehman Hutton Inc., pleaded guilty in 1985 to 2,000 counts of mail and wire fraud and agreed to pay a $2-million fine after admitting that branch employees participated in the overdrafting scheme.