About 12,000 shareholders are suing Royal Bank of Scotland Group and former CEO Fred Goodwin claiming the lender misled them in 2008 when it issued new shares months before a government bailout.
The investors might seek as much as £4 billion ($6 billion) in the class-action suit filed in London, the RBOS Shareholder Action Group said Wednesday in a statement. It's the second complaint in less than a week over the rights issue after pension funds and investment firms sued on March 28.
RBS is 81% owned by British taxpayers after getting the world's biggest bank bailout — £45.5 billion — in 2008 and 2009 at the height of the global financial crisis. The lender had raised £12 billion from investors in the share sale before collapsing under the weight of bad loans.
“This is one of the largest shareholder actions we have seen brought against the U.K. banks,” said Simon Hart, a London-based trial lawyer specializing in financial disputes who isn't involved in the suit. The RBS lawsuits are “borne directly out of the unprecedented upheavals in the banking industry in 2008.”
Former RBS Chairman Tom McKillop, ex-head of corporate markets Johnny Cameron and former Finance Director Guy Whittaker also were named in the suit.
David Gaffney, a spokesman for Edinburgh-based RBS, declined to comment and Mr. Cameron declined to comment. New Century Media, a public relations firm that used to represent Mr. Goodwin, said it no longer worked for him and wasn't able to provide details for his current spokesman. Evolva SA, a Swiss company where Mr. McKillop is chairman, declined to provide contact details. An RBS spokesman said the bank didn't have contact details for Mr. Whittaker. Numbers for the men couldn't be located on directory assistance.
RBS in February posted a £5.97 billion loss after what CEO Stephen Hester said was a “chastening year” in 2012. The lender was fined $612 million in February for rigging benchmark interest rates such as the London interbank offered rate and has set aside more than £2 billion to compensate customers wrongly sold so-called PPI loan insurance.
The U.K. Financial Services Authority in 2011 cleared Mr. Goodwin and other directors of wrongdoing over the near-collapse of RBS. It acknowledged that regulators had been too lenient in not challenging Mr. Goodwin's “dominant” management style.
The lead plaintiff in the case, John Greenwood, spent about £65,000 investing in the 2008 share offering at 200 pence a share, the shareholder group said in a court filing. He sold the stock later at 68 pence and 37 pence, losing about 70% of his investment. Among the other 12,000 claimants are retirees and 100 institutional investors.