UK - Two major local authority schemes have started legal action against Royal Bank of Scotland, alleging it made "materially false and misleading" statements about its financial health.
The schemes and are seeking damages for losses incurred as a result of the massive fall in the value of their investments when RBS was forced to take a bail out from the government.
The schemes allege RBS "falsely reassured investors" the company was well-capitalised when it was in reality "effectively insolvent as a result of impaired assets, bad loans, and its disastrous partial acquisition of ABN AMRO".
The case - which will be heard in the US - specifically names former chief executive Sir Fred Goodwin and other members of the RBS board of directors.
Specialist law firm Coughlin Stoia will act as attorney for the plaintiffs in the US. Cherie Booth QC has also been hired by the funds.
Sacker & Partners partner Peter Murphy said he was not surprised a class action case had been brought against the bank, given the decline in its share price in recent months.
He told Global Pensions: "What is surprising is that the lead plaintiffs are two UK pension funds - in general UK local authority funds have been cautious about becoming involved in US class action cases.
"Although the details on the case are scant, they must be confident about the outcome. In this type of case, US lawyers will act on a no-win no-fee basis, so if it's not successful the funds wouldn't be liable to RBS' legal fees. They'd have no personal exposure."
The schemes were not available to comment as we went to press. RBS also declined to comment.
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