Sources claim that shareholders of Royal Bank of Scotland (RBS) are in talks with litigation funds in order to launch a £3.3 billion fund lawsuit against the infamous bank and its former chief executive Fred Goodwin, for misleading investors in 2008 over the £12 billion rights issue.
Known as the RBoS Shareholders Action Group, the shareholders plan to sue RBS and its former chief executive Fred Goodwin, along with former chairman Tom McKillop and the former investment bank chief Johnny Cameron, for misguiding investors in 2008, The Times was quoted as saying.
Reuters reports stated that the shareholders lost nine-tenths of their money after buying shares in the doomed rights issue. The shareholders allege that they were misled by omissions in the prospectus which hid the true picture of the bank, which was later bailed out by the British government during the 2008 financial crisis.
The Times was cited as saying that legal proceedings will begin in the coming weeks if the shareholders group secures about £12 million to £15 million to pay for the cost of potential defeat.
HSBC, Deutsche Bank and Credit Agricole are among 91 institutional investors supporting the shareholder group, with 20 more ready to join in once the group has secured the necessary cost cover in place, the newspaper said.
This is a new allegation against RBS which is already facing many litigations – the recent being the investigation undertaken by the US and the UK regulatory authorities regarding breach of Iran sanctions.