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Shareholders File Lawsuit At RBS Over Losses
Tom Burroughes
15 July 2013
A group of shareholders in Royal Bank of Scotland – the parent firm of Coutts - is suing RBS
and four former directors for losses they say they suffered when the bank’s
plight led to it being bailed out by the UK taxpayer in 2008, media reports said. The RBoS Shareholders Action Group has issued proceedings
against the Edinburgh-headquartered bank, Fred Goodwin (its former CEO), Tom
McKillop, Johnny Cameron and Guy Whittaker, in the chancery division of Britain's High
Court. They are seeking to recover billions of pounds lost on the value of
their shares ahead of RBS’s bailout. The final claim for compensation could be as much as £4
billion ($6.02 billion), the shareholder group said, according to Reuters. The group, which comprises some 12,000 ordinary shareholders
and 100 institutions, alleges that RBS misled investors about its financial
health during a £12 billion share sale conducted six months before its October
2008 bailout. It also says that the bank and its former employees omitted to
include critical information in the prospectus. RBS declined to comment on the matter when contacted by this
publication. In the past couple of years, two lawsuits in the US against the
bank concerning a rights issue involving preference shares and ADRs (American
Depository Receipts) were struck down. The Financial Services Authority (the
former UK financial regulator), in a review of the circumstances leading up to
the bailout of RBS, criticised the bank’s senior managers and decisions but saw
no case for legal action against it. A spokesperson for the RBoS Shareholders Action Group was
quoted by media as saying: "Today represents a giant step forward for the
many thousands of ordinary people who lost money as the result of inexcusable
actions taken by banks and their directors... Now, for the first time, some of
these directors will have to answer for their actions in a British Court." In its full-year results for 2012, RBS logged a loss
attributable to ordinary and B shareholders of £5.971 billion, widening from a
loss of £1.997 billion in 2011. Earlier suit Another
group of current and former shareholders in RBS has launched a
multi-million pound lawsuit against the bank for allegedly misleading investors over a rights issue of new shares in the lead-up to the credit
crisis in 2008. A group of 21
claimants - including pension funds - allege the bank published a
defective prospectus littered with misstatements and omissions. Among
those bringing the suit are the Coal Staff Superannuation Scheme, the
Mineworkers' Pension Scheme, pension schemes for electricity workers in
the UK, a number of ING funds and the teachers' retirement system of the
state of Illinois. Litigation funder Argentum says it has broken the mould by providing funding for the suit. Matthew
Reach, solicitor and head of legal review at Argentum said: “This is
truly a case of David and Goliath. Without litigation funding from
Argentum these shareholders might never have had access to justice. It
is important that these shareholders, who lost substantial sums, have
their day in court and the bank is held accountable for its actions.
This is a pioneering piece of litigation, but we feel it is compelling
and are proud to be supporting such a cause.”