(Adds details on timing, defence of funding sources)
By Andrew MacAskill
LONDON, March 10 A judge on Thursday ordered
legal representatives of thousands of shareholders suing Royal
Bank of Scotland over a 12 billion pound ($15 billion)
cash call to reveal the source of its funding to meet the hefty
risks of a trial.
RBoS Shareholder Action Group, a 27,000-strong group of
retail shareholders backed by around 100 institutions, was told
to be more transparent about its ability to cover legal expenses
if they lose the case, dating back to 2008, according to court
documents. The trial is due to start in May.
The group must provide the information to the court by
High Court Judge Robert Hildyard said he was "troubled by
the inconsistency of statements" by the group. At least one
statement was inaccurate and had been made without the knowledge
of the claimants' solicitors, he said.
"I have also become concerned whether there is sufficient
funding," Hildyard said. "In light of the concerns I have
expressed, I think it appropriate and necessary that there
should be more transparency as to the funding position."
State-backed RBS has run up a legal bill of well over 100
million pounds so far in the case and expects to spend another
25 million pounds to the end of the first trial.
The RBoS shareholder group has so far exceeded 20 million
pounds in costs, the judge said.
The bank had sought to push the claimants to reveal details
of its funding because of what the judge called "the magnitude
of the claimants' exposure."
RBoS Shareholder Action Group and the bank declined to
A source close to the group says their funding comes from a
variety of sources and that most of the lawsuit is backed by
some of the world's wealthiest fund managers.
The civil lawsuit has been brought by investors who bought
shares in a 2008 cash call and lost most of their money when the
bank collapsed a few months later. RBS was rescued by the U.K.
government with a bailout that ended up costing 45.5 billion
The investors are suing for compensation, alleging RBS did
not give a proper picture of its finances at the time of the
cash call. RBS denies the allegations that it misled investors.
Four claimant groups accepted RBS's offer of 800 million
pounds last year to draw a line under the allegations, leaving
the shareholder group as the last to take the case to trial.
($1 = 0.8230 pounds)
(Reporting by Andrew MacAskill; Editing by Ruth Pitchford)