Second group sues RBS directors over rights issue

Fred Goodwin and other former directors at Royal Bank of Scotland are facing a potential £4bn legal claim from disgruntled shareholders.

The RBS Shareholder Action Group, which represents 12,000 private shareholders and more than 100 institutions, claims the directors misled investors in the lead-up to its rights issue in 2008.

The group said the bank "misrepresented its underlying strength" and "omitted critical information" in the prospectus for the fund raising.

RBS launched the £12bn rights issue to shore up its balance sheet after its disastrous acquisition of the Dutch bank ABN Amro. However, the RBS share price collapsed by 95 per cent within months, and it had to be bailed out by taxpayers in October 2008.

A spokesman for the group said: "This is 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 in the financial crisis.

"Now, for the first time, some of these directors will have to answer for their actions in a British court."

As well as Mr Goodwin, the group has started proceedings against RBS itself, its former chairman Tom McKillop, former investment bank chief Johnny Cameron, and former finance director Guy Whittaker.

The group, which lodged the case in the High Court in London yesterday, estimates that the final claim may be as much as £4bn.

The legal action is the second the bank has faced in less than a week. On Friday, a group made up of 21 financial institutions, including pension funds representing British coal miners and electricity workers, funds from Germany, Italy, Switzerland and Luxembourg, and retired schoolteachers from the US state of Illinois, also teamed up to sue RBS.

Stewarts Law, the City law firm which is acting on behalf of the claimants in that case, alleges that the RBS prospectus for the rights issue contained "serious omissions and mis-statements" and "the shareholders are entitled to compensation".

In contrast to the RBS Action Group, Stewarts Law did not put a value on the claim. However, the law firm said on Friday: "The claimants allege that the prospectus on which the rights issue was based was defective in that it contained material mis-statements and omissions.

"The claimants maintain that although the prospectus portrayed an image of the bank being in a state of financial good health and stability, the reality was very different, and that had the truth been known, the take-up of shares under the rights issue would have been severely impacted," it added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory