| LONDON, March 28
LONDON, March 28 A group of shareholders in
Royal Bank of Scotland (RBS) has launched a
multi-million pound lawsuit against the state-owned bank for
misleading investors at the height of the credit crisis in 2008.
In the first court document filed in the UK over the bank's
record 12 billion pound ($18 billion) cash call in April 2008, a
group of 21 claimants - including international investors and
pension funds - allege the bank published a defective prospectus
littered with misstatements and omissions.
The claim was issued in London's High Court just days before
a much larger 4.0 billion pound lawsuit is expected from another
investor grouping called the RBoS Shareholders Action Group.
Both claims could lead to RBS's disgraced former CEO Fred
Goodwin being forced to appear in court to defend the bank's
"Unless the matter can be resolved amicably, the claimants
intend to pursue this litigation vigorously and through to trial
in order to seek appropriate redress from the court," said
Clive Zietman of UK law firm Stewarts Law, who is representing
the 21 claimants.
Only broad outlines have been filed so far of a claim
Zietman said could be worth "hundreds of millions of pounds".
The RBoS Shareholders Action Group - a group of some 12,000
ordinary shareholders and 100 institutions - has also alleged
that RBS misled investors about its financial health at the time
of the rights issue and is demanding compensation.
RBS declined comment and its law firm, Herbert Smith, was
not available for comment.
The failure of the bank - once a small Scottish retail
lender that staged a meteoric rise to global prominence before a
spectacular collapse which threatened to fell the entire UK
financial system - was averted only by a 45 billion pound
taxpayer bailout and billions more in state-backed loans.
Goodwin, dubbed "Fred the Shred" for his cost-cutting
abilities, was knighted in 2004 for services to banking in an
era of "light touch" regulation that celebrated financial
innovation under former prime minister Gordon Brown.
But Goodwin's tenure at RBS was brought to an ignominious
end after RBS succeeded in its pursuit of ABN AMRO, only to find
its Dutch peer's assets overvalued just as the unfolding credit
crisis undermined the entire bank sector in late 2007 and 2008.
RBS, already struggling to secure financing for a ballooning
leveraged finance and commercial real estate lending business,
launched a rights issue, but with its shares in freefall as the
liquidity crisis took hold, it was not enough.
In October 2008, with corporate customers withdrawing
deposits and RBS hours away from running out of cash, the
government took an 83 percent stake and Goodwin became one of
the highest-profile failures of the credit crisis.
But he was also one of the best paid, sent home with an
annual pension of over 700,000 pounds before a public outcry
forced him to slash it to an annual 342,500 pounds.
He was also stripped of his knighthood in early 2012.