RBS Tipped to Respond to £4bn Shareholder Action Group Lawsuit
The Royal Bank of Scotland is tipped to deliver its response to the £4bn shareholder group lawsuit, which was launched in April this year, over allegations that the bank did not fully disclose its true financial condition prior to the government bailout.
In a statement sent to IBTimes UK, the 12,000-strong RBOS Shareholder Action Group said it is expecting an official response from RBS, after initially launching a complaint nine months ago which then eventually led to a lawsuit
"We anticipate RBS finally filing its defence imminently some nine months after we lodged our claim against the bank and a number of its former directors," said the group's representatives.
"Whilst our legal team will need a period of time to read the defence and reply formally, our position remains clear. Why did the directors of the bank present the 2008 rights issue to investors at the time as a prudent capital strengthening when it was clearly an attempt to shore up a collapsing balance sheet?
"Had shareholders been given the true picture of the bank's position, they would have had a better opportunity to assess the risks which caused the shares to collapse and led to billions of pounds of losses for private and institutional shareholders alike.
"We look forward to hearing how the bank and the former directors will attempt to defend their actions but suspect that, despite hundreds of pages of justification, this simple point will not be answered."
The RBOS Shareholder Action Group filed proceedings in London's High Court in April this year, against former executives Fred Goodwin, Tom McKillop, Johnny Cameron, and Guy Whittaker and the bank itself, alleging they were sold shares under false pretences.
While the action group is comprised of mainly of retail investors including pensioners and former RBS workers, over 100 institutional investors who lost money in the RBS 2008 rights issue, are part of the collective action.
The group is suing the bank and former executives for apparently misleading shareholders by "misrepresenting the underlying strength of the bank and omitting critical information from the 2008 Rights Issue prospectus.
"This means that RBS will be liable for the losses incurred on shares subscribed in the rights issue, by reason of breaches of Section 90 of the Financial Services and Markets Act 2000," said the group's statement at the time.
In 2008, RBS raised £12bn (€14bn, $20bn) in its rights issue but was soon bailed out by the government, which has led to investors losing over 90% of their money since then.
RBS received a taxpayer funded £45bn bailout in 2008 which eventually led it to be 81% owned by the government.
In response the the shareholder group's claims and statement, it said "while RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally."
"We believe we have strong defences to the claims that are being brought against the Group and that is why we intend to defend these vigorously and to protect the interests of our shareholders including UK taxpayers."
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