Institutional investor-backed Royal Bank of Scotland legal action goes forward

Action group delivers claim against bank and directors

An action group backed by 80 institutional investors has taken forward its £2.4bn (€2.9bn) legal claim against the Royal Bank of Scotland.

The RBOS Shareholders Action Group this week delivered ‘letters of claim’ to former RBS Chief Executive Fred Goodwin, 18 other former directors and the bank itself.

The group alleges that RBS and its former directors knowingly made “misleading statements” and “critical omissions” that gave a false picture of RBS’s financial health in a rights issue prospectus in April 2008.

The action group says it has 7,400 individual investors and 80 institutional investors as members. The size of the claim is currently for £2.4bn though this is expected to rise to at least £3bn as more investors join the group.The Glasgow Herald reported today that the Falkirk Council Pension Fund was on the verge of joining the action, while the Strathclyde Pension Fund was “monitoring developments closely”. A spokeswoman for the Lothian Pension Fund was quoted as saying it was considering its options.

Action group chairman Mike Neill said the group has chosen to proceed with legal action because of “extreme disappointment” with a report from the Financial Services Authority last December.

Proceedings are expected to be heard in the High Court in the early summer, dependent on the response of RBS and its former board directors. The bank has said it plans to contest the claims on “credible and factual” grounds. Link