01 Apr 2009, David Benyon, Operational Risk & Regulation
NEW YORK & LONDON - Royal Bank of Scotland (RBS) is facing a £4 billion class-action lawsuit taken up by Cherie Blair, lawyer and wife of former UK prime minister Tony Blair, over "false assurances" about RBS's financial health prior to collapsing share prices last year.
The North Yorkshire and Merseyside local government pension funds have hired Blair to work on the lawsuit, filed in New York, alongside California-based law firm Coughlin Stoia Geller Rudman & Robbins.
Dutch pension fund and asset manager MN Services has also joined the class action as a co-lead plaintiff, after taking losses to RBS.
The suit names former RBS chairman Fred Goodwin - currently at the centre of a UK political furore over his own large pension package - and the entire RBS board of directors as co-defendants. The lawsuit has been filed in the US, where the law is more flexible to allow class-action lawsuits.
RBS sought government aid and majority state ownership after taking a £24 billion loss for 2008. The New York lawsuit uniquely pits RBS - now 70% owned by the national government of UK prime minister Gordon Brown - against local government authorities.