Three of the country's largest pension schemes are in talks to join a lawsuit against Lloyds TSB directors for allegedly misleading investors over the Halifax Bank of Scotland (HBOS) merger.
Shareholder group Lloyds Action Now (LAN) is close to filing a case in the High Court against the Lloyds directors who chaired the bank at the time of the HBOS takeover in 2008.
LAN claimed the directors misled Lloyds shareholders and neglected their fiduciary duty by not disclosing information about HBOS’ financial state.
The group argued the directors knew HBOS was being supported by £25bn of Emergency Liquidity Assistance from the Bank of England and $11bn from the US Federal Reserve to keep it afloat, but did not reveal this to shareholders who voted in favour of the takeover.
LAN hopes to appoint McGuireWoods partner Har-deep Nahal to run the case once it confirms arrangements with funders.
Nahal, pictured, said: “At the moment we are in very serious talks with three of the biggest pension funds.”
He said one of the funds has around £20bn assets under management, while the other two are of comparable size.
A smaller local government pension fund is also considering joining the suit once funding for the court battle is in place.
A LAN spokesperson said: “Gordon Brown said he saved the world; well, unfortunately the pensioners of Britain have saved the world with Lloyds pensioners and Lloyds investors, because they were misled into this investment and as a result they have suffered terribly.”
In internal documents seen by IFAonline's sister title Professional Pensions, damages are estimated at £1.25 to £2.80 for ordinary LTSB shares.
Nahal said this could amount to between £600m and £3bn of compensation.
The UK case is being run in “close liaison” with a US class action suit filed in January.
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