RBS and Goodwin sued for £2.4bn by angry investors
Shareholders claim the bailed-out bank's former bosses misled them over a rights issue in 2008
Monday 12 March 2012
Royal Bank of Scotland and former directors including ex-chief executive Fred Goodwin and ex-chairman Sir Tom McKillop have been hit with a £2.4bn legal claim from angry investors in the taxpayer bailed-out bank.
RBOS Shareholders Action Group was due to deliver claims letters to the bank and 17 former directors today, including the former head of investment banking Johnny Cameron and the former finance director Guy Whittaker. These claim that RBS misled investors in the propectus for its £12bn rights issue to fund the takeover of the Dutch bank ABN Amro just five months before it had to be bailed out.
The Action Group is backed by 7,400 private shareholders and some 80 institutional investors, including Collins Stewart, Deutsche Bank, SG Hambro, State Street Securities and HSBC Global Custody. Ironically it also includes NatWest Stockbrokers.
The statement of claim, issued by the London legal firm Bird & Bird, is set to allege that RBS and its board withheld or misrepresented information about the true state of the bank's finance when it launched the rights issue in April 2008.
Investors suffered huge losses as a result of the bailouts. In December of that year RBS received its first £20bn state bailout, followed by a second round of taxpayer money worth £25bn in December 2009.
RBS shares hit an all-time peak of 607p in March 2007. Following the takeover of ABN Amro the rights issue was launched at 200p a share. The Government paid an average price of 50p a share for its 82 per cent stake. Today the share price is just 26.2p.
The action group claims that Mr Goodwin publicly denied the need for a rights issue, stating only two months beforehand: "There are no plans for any inorganic capital raisings or anything of the sort."
The Financial Services Authority did not take any action against Mr Goodwin or any other RBS directors, despite stating that the bank's near collapse was due to poor management. Mr Goodwin was stripped of his knighthood.
Mike Neill, chairman of the action group, said there had been "extreme disappointment" with the FSA's report.
He said: "We had been led to believe the FSA would adjudicate on whether RBS misled investors in early 2008, whether the 2008 RBS annual report and accounts were accurate, and whether shareholders deserved to be compensated."
The action group's claim states that RBS failed to disclose to shareholders and the market that it was reliant on $11.9bn in cheap loans provided by the US Federal Reserve at the time of the rights issue. The action group is trying to encourage more shareholders to back the action. Preliminary hearings could begin this summer.
A spokesman for RBS said the group has "substantial and credible legal and factual defences" to the claims and will "defend itself vigorously".
- 1 King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
- 2 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Presidential optical illusion offers clues to how brain processes faces
- 5 Grumpy Roald Dahl letter warning student to 'eschew beastly adjectives' rediscovered after 35 years
King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Presidential optical illusion offers clues to how brain processes faces
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Louise Mensch says 'F**K YOU' in explosive tweets about David Cameron, Saudi Embassy and the Queen over King Abdullah tributes
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...