Lloyds sued by U.S. investors demanding compensation for HBOS deal
Lawsuit: Lloyds and its bosses, including ex-chief executive Eric Daniels, are being sued by U.S. investors
US shareholders in Lloyds at the time of its takeover of HBOS have launched lawsuits against the bank, its former chairman, Sir Victor Blank, and ex-chief executive Eric Daniels.
They are seeking compensation through the US courts for the disastrous deal. Investors claim Lloyds and its top brass failed to disclose that the Bank of England had secretly supplied £25billion of emergency funds to keep HBOS afloat, or that the US Federal Reserve had provided a further $11billion.
They argue that as a consequence shareholders did not know HBOS was technically insolvent at the time of the takeover and that they were in the dark about its finances when purchasing American Depositary Receipts in Lloyds. ADRs are an investment traded on the New York Stock Exchange.
The takeover of HBOS led to a rout in Lloyds shares. They were almost 280p at the time, but at the end of last year closed at just under 26p.
Adrian Lithgow, a spokesman for the Lloyds Action Now campaign, which has several thousand members, said the group is hoping to launch a similar action in the UK, if it can secure funding.
'It would be unconscionable if Lloyds were to lose the case and have to pay compensation in the US but not in the UK,' he said.
'We also looked long and hard at suing the Treasury but they obtained an indemnity from Lloyds so they cannot be sued for non-disclosure.'
The action group is in talks with a number of investors who specialise in funding legal cases and has appointed law firm Maguire Woods.
Lord Myners, the former Treasury minister who oversaw the bank bailouts, has called for the Financial Services Authority to publish a report on the downfall of HBOS, whose bad debts since the start of the crisis are expected to top £60billion.
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