Quinn Emanuel, Stewarts and Bird & Bird gear up for RBS rights battle

Quinn Emanuel Urquhart & Sullivan and litigation boutique Leon Kaye have formally joined the £4bn shareholder battle brought against the Royal Bank of Scotland (RBS) over its 2008 rights issue.

Leon Kaye, Quinn Emanuel, Stewarts Law and Bird & Bird are now all representing claimants suing the bank over a 2008 £12bn rights issue which investors allege was defective and contained “material misstatements and omissions” (18 September 2013).

Stewarts Law’s claim has also swelled to £1.4bn and the group has expanded from 80 institutional investors and pensions funds to 313.

The firm was the first to issue a claim against the bank, in March 2013, on behalf of investors claiming they were misled about the health of the bank when they invested. Partner Clive Zietman is leading the case and has instructed 3 Verulam Buildings’ Andrew Onslow QC and Adam Kramer (6 January 2014).

Bird & Bird also lodged a claim for the RBS Rights Action Group last year. The group is made up of 7,000 former RBS shareholders and a number of institutions. Partner Steven Baker instructed Serle Court’s Philip Marshall QC.

Quinn and Leon Kaye were the last to join proceedings, a year after Stewarts and Quinn. At the beginning of the year the two had not joined the case, prompting Bird & Bird to call for the firm to be banned from proceedings unless it filed a claim. Mr Justice Hoilyard rejected the application in February 2014 (25 February 2014).

He said: “There may yet be matters that touch and concern interested persons even though they have not yet issued and on which I consider it right that they be heard” (26 February 2014).

Quinn partner Sue Prevezer QC is representing a group of small and large institutional clients, instructing Erskine Chambers’ Richard Snowden QC and Alex Barden. The claim is understood to be worth £1.2bn.

Leon Kaye partner Leon Kaye has instructed 3 Verulam Buildings’ Michael Lazarus.

In February confusion over which claimants had and had not filed was cited by Bird & Bird as the cause of a mistake made in presenting the claim value. The court issued a warning to Baker after the value of the claim put forward by his group fluctuated considerably.

In November, Baker submitted a witness statement to the court in which he said losses were the equivalent of around £900m in shares and that the total acquisition value of those shares would be £1.25bn. A month later he lowered the losses estimate to £392m and the acquisition value to £490m, blaming “a mistake made in differentiating between members of the group and actual claimants, and thus in calculating the value of aggregate claims”.

It is understood that the Bird & Bird group has also now grown in size.

The next hearing for the case will take place in November when costs could be discussed again. They have proved contentious, with debates swirling about how they should be shared among claimants.

It has now been decided that claimants will shoulder costs pro rata individual shareholdings, not per person.

RBS has turned to Herbert Smith Freehills (HSF) for the case, which submitted a £42m cost estimate at the end of 2013. The firm fielded partner Adam Johnson.  2Birds has submitted a costs estimate of £10-12m for the case and Stewarts Law’s estimate was £8.5m.

HSF is also representing Lloyds in its own shareholder dispute launched this month by 220 investors against the bank’s 2008 takeover of HBOS (7 August 2014).