RBS to rack up £42m legal bill over shareholder action, High Court told

Royal Bank of Scotland (RBS) is expected to run up a legal bill of £42m defending shareholder action over its £12bn rights issue, with Quinn Emanuel expected to join the action for Prudential, Standard Life and Legal & General.

Rolls Building
Rolls Building

In a case management conference at the Rolls Building yesterday (17 September 2013), Mr Justice Hildyard was told of the expected bill. The bank has turned to Herbert Smith Freehills to defend the case, which is worth a potential £4bn, with partner Adam Johnson instructing Serle Court’s David Blayney QC. 

Stewarts Law issued the claim against the bank in March on behalf of the 53 institutional investors, which alleges that they were misled over RBS’ rights issue in April 2008 (23 April 2008).

Stewarts Law head of commercial litigation Clive Zietman is heading the team for the shareholder action group with litigation partners Keith Thomas and Fiona Gillet. The firm has instructed 3 Verulam Buildings’ Andrew Onslow QC and Adam Kramer (28 March 2013).

Third-party funder Argentum has agreed to bankroll the case for Stewarts (4 April 2013).

Bird & Bird partner Steven Baker has instructed Serle Court’s Phillip Marshall QC to lead 20 Essex Street’s Tom Raphael for the RBS Rights Action Group, which is made up of 7,000 former RBS shareholders and a number of institutions. 

Since March the action has ballooned with new claimants threatening to enter the fray.

London firm Leon Kaye is yet to issue a claim but is representing the RBS Rights Issue Action Group, which is also considering whether to join the case, with the named partner Leon Kaye instructing 3 Verulam Buildings’ Michael Lazarus.

Quinn Emanuel may also join the action having been instructed by Prudential, Standard Life and Legal & General. The three fund management groups were told yesterday that they needed to decide whether to issue proceedings or risk penalties for hestitating.

Quinn Emanuel partner Sue Prevezer QC is leading the team having instructed Erskine Chambers’ Richard Snowden QC.

The group claims that the prospectus on which the rights issue was based was defective and contained “material misstatements and omissions”. They are also claiming that the prospectus portrayed the bank as being in good financial health, but the reality was different and the take-up of shares would have been limited “had the truth been known”. Shares in the bank sold for £2 each.

The dipute is shaping up to be one of the standout battles of 2014. The claimants will return to court in November to determine how RBS’ costs would be split among the group should the claims be dismissed.