The highly complex Royal Bank of Scotland 2008 rights issue litigation has seen Bird & Bird’s dispute resolution head Steven Baker criticised at the High Court over a £500m fluctuation in the value of the claim.
In his fifth witness statement to the court in November Baker, who represents John Greenwood and the RBoS Shareholders Action Group Limited, with around 12,000 retail and around 100 corporate, institutional and charitable members (the BB Action Group), told the court: ‘the losses suffered by the members of the BB Action Group who have actually issued proceedings so far would equate to approximately £900m…and the total acquisition value of those claimants’ shares is £1.25bn.’
These figures were relied on by Mr Justice Hildyard in the third case management conference.
However in his seventh witness statement in January in the proceedings, in which the claimants allege RBS’ 2008 rights issue prospectus was defective and contained material misstatements and omissions, Baker corrected these figures to £392m (in place of £900m) and approximately £490m (in place of £1.125bn) respectively.
Mr Justice Hildyard said: ‘The explanation (and excuse) for these startling differences given by Mr Baker is that there was a mistake made in differentiating between members of the Group and actual claimants, and thus in calculating the value of aggregate claims. This mistake is regrettable in itself, especially in the wake of earlier inaccuracies in statements made by the BB Action Group or on its behalf as to the availability of ATE cover. I shall expect a greater degree of care and accuracy in the future.’
Bird & Bird is heading one of two large claims against RBS over its rights issue, led by Baker and Serle Court’s Philip Marshall QC. The action is being brought against the bank’s former chief executive Fred Goodwin and three other directors.
The second action RBS faces includes a group of 21 claimants involving a number of UK and international financial institutions and pension funds, led by Stewarts Law partner Clive Zietman and 3 Verulam Buildings’ Andrew Onslow QC. Litigation funder Argentum is backing this action.
Herbert Smith Freehills is defending RBS in both cases.
A spokesperson for Bird & Bird said: ‘This is the biggest ever such claim in the UK, and we are representing the leading shareholder group. It is a major achievement to have mustered such a group to fight for compensation on behalf of shareholders who suffered huge losses in RBS’ rights issue in 2008.
‘There was no miscalculation of the issued members of the Action Group’s claims. There was simply a factual error in expressing the value of claims issued when in fact some of those claims had been deferred. In any event, the balance of those claims will be issued shortly, together with further substantial claims.’