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

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".

Suggested Topics
Sport
Club legend Paul Scholes is scared United could disappear into 'the wilderness'
football
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Travel
Dinosaurs Unleashed at the Eden Project
travel
Arts and Entertainment
music
Sport
football
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home