Investors in the Royal Bank of Scotland have started a £2.4 billion legal claim against former chief executive Fred Goodwin and other former senior executives at the bailed-out bank.
The claimants believe they were misled over the financial performance of the bank before investing just months before the bank needed a £45 billion bailout.
The RBOS Shareholders Action Group, which has the support of 80 institutional investors as well as 7,400 private shareholders, has sent claim letters to 17 former directors who believe they were given inaccurate financial information before investing £12 billion.
London lawyers Bird & Bird will send out letters today to Mr Goodwin, former finance director Guy Whittaker, former chairman Sir Tom McKillop and former head of investment banking Johnny Cameron among others.
Investors are furious that they were not told about an alleged loan received from the US Federal Reserve, which, if it had been made public, would have allowed investors to decide to become part of a rights issue with the full knowledge of the facts.
An announcement of the requirement for a loan would have affected the share price and could have meant that investors paid less for the shares at the time of the rights issue than they did. Shares were valued at £2.00 at the time of the rights issue but by October 2008 were worth just a third of that.
The group of shareholders claim that Mr Goodwin publicly denied that a rights issue would be required to raise funds.
The Financial Services Authority (FSA) produced a demining report on the management of RBS leading up to the credit crunch but did not attempt to prosecute Fred Goodwin or any other members of the management team.
A spokesman for RBS said the group has “substantial and credible legal and factual defences” to the claims and will “defend itself vigorously.”
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