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Investors of RBS taking legal action against lost of right issue

Before the bank was nationalized, a Group of shareholders in Royal Bank of Scotland is about to take a legal action to recover losses sustained after they subscribed to a rights issue in 2008. On Monday the bank had not received the letter or been served with proceedings. As independent newspaper reported earlier that the claim would total 2.4 billion pounds $3.77 billion (2.41 billion pounds), on behalf of 7,400 private shareholders. Some of its private clients were taking part in the action, stated by a senior source at a London wealth management institution. A legal source with knowledge of the process said London law firm Bird & Bird will send a letter of claim to the bank on Monday on behalf of a substantial group of shareholders.

According to a legal source Investors, represented by the RBS Shareholders Action Group, are making the claim against the bank and a small group of former directors including Fred Goodwin, chief executive of the bank before it was rescued by the British taxpayer. In 2008 the claim centers on losses incurred by shareholders who subscribed to a rights issue, acquiring further shares in RBS at 200 pence. RBS shares currently trade around 26 pence. The action group claimed that they have been mislead into pumping £12bn into a right issue and the bank are alleged to be “jointly and severally liable” for their losses. They claimed that the RBS boards deliberately mislead investors in a 148 page right issue.

The action group claimed that the rights issue prospectus, published months before the company required a massive state bailout, were also misleading in the website. According to a statement made by RBS on Monday the group considers that it has substantial and credible legal and factual defenses to the remaining and prospective claims, and will defend it vigorously. Short of funds apply with Text loans and get funds right away.

In June 2008 RBS ANNOUNCED the largest rights issue in British corporate history and sought to boost capital with a 12 billion-pound rights issue offering more than 6 billion new shares to existing investors, who took up 95 percent of the offer resulting from the bad investments and to shore up its reserves following the purchase of ABN AMRO. In January 2009 it was announced that RBS had made a loss of £28bn. The government acquired a majority stake in the bank and now holds more than 80 percent of the shares after that year. The shareholder action group of RBS did not respond to a request for comment.

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