An investor has taken Royal Bank of Scotland Group to court over last year's £12bn rights issue.
Ian Hamilton, a former QC, has filed a civil case claiming the bank was already insolvent when it issued shares and tricked investors into coughing up more cash.
At the time of the £12bn rights issue, the largest in British corporate history, Hamilton purchased 640 RBS shares at a cost of £2 per share. They have since fallen in value by more than 90%.
He says RBS convinced investors to buy new shares while concealing the true state of its finances.
Since the rights issue, RBS has received a £20bn bail-out from the Government, which now owns 68% of the bank, and has announced it will post a £28bn loss for 2008.
Hamilton alleges the bank represented itself as being solvent when bosses knew the firm was in server financial difficulty.
RBS says the case should be heard in a higher court, but Hamilton says he will not pursue it if it moves beyond the small claims court.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
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