3rd April 2013

Today many of you will have heard the good news that a fellow Action Group (RBoS) have commenced legal action against RBS and some of it’s former directors, including Fred the Shred.  Therefore, if any of you have contacted this site in order to  try and join in RBoS’s action I suggest that you make contact with RBoS through Fred Campbell at fredcampbell@rbosaction.org

RBoS have had the good fortune to have attracted some very large shareholders, institutional and otherwise, and have therefore been able to put the necessary funding in place in order that they can take legal action in the courts.  We ourselves, are pursuing exactly the same claim as RBoS and using the same arguments against RBS and it’s former directors.  Now that RBoS have launched their claim we are intensifying our efforts to put the necessary funding in to place in order that we can also commence legal action.

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Welcome to the RBS Action Group Website

( For the latest information please click on to “Latest News” at the top left hand corner of this page)

The purpose of this website is to make contact with other Royal Bank of Scotland shareholders who subscribed to the 2008 Rights Issue with the aim of taking a Class legal action against RBS regarding the circumstances surrounding the Rights Issue and the consequent losses to investors.

michael and kim lamoureuxI propose to seek compensation by way of damages for misrepresentation arising out of the prospectus which preceded the Rights Issue.  I am currently talking to a firm of London solicitors who are specialists in Class Actions (legal actions which are taken on behalf of any number of litigants) and will report to this web site once I have had my meeting with them.

Are you a Royal Bank of Scotland shareholder, or a RBS Pensioner shareholder, who subscribed to the RBS rights issue of April 2008 ?

If your answer is “YES” then you, like my wife and I, will be extremely unhappy regarding our current situation with regard to our RBS shares and even more unhappy that we subscribed to the rights issue.  This unhappiness is compounded by the fact that my wife, who is an RBS pensioner, and I are very loyal people who felt that we could trust RBS.

However recent events have confirmed my belief that we were deliberately misled by RBS through the statements made by RBS both before the rights issue and by the statements made in the rights issue prospectus.  Our wish to take this further commenced from an article which I read in The Guardian which reported that a member of The Scottish Parliament, Christine Grahame, had referred the RBS rights issue to the Lothian and Borders Police.  As a result of this article I, perhaps like many of you, wrote to her.
In that letter I did an analysis of the rights issue prospectus which was sent to all of us.

Having done that I pointed out the following:

The prospectus was 145 pages along, a lengthy document, a lot of which contained various figures, abbreviations, terms and expressions etc which are
complete gobbledygook for somebody who is not involved in this very specialised area of banking.  I think that if you had taken it along to your local senior bank manager even he or she couldn’t have explained it to you.

Nevertheless, we all had to make a decision as to whether or not we invested in the rights issue.  In my analysis, I pointed out the following:

The Prospectus

1. Under the heading Current trading and prospectus, detailed on page 8, RBS clearly show that they were aware of the problems which were mounting in the U.S. retail market i.e.the sub-prime market.  My view is that, knowing the extent of their involvement in this market and therefore the potential effects on their capital reserves, the amount of extra capital they needed to raise should have been fairly clear to them. The sum they needed was, I suggest, clearly in excess of the £12 billion, they eventually raised.  Their reasons for only trying to raise £12 billion was, I believe, that they knew that the financial market would not bear raising more than that sum.  Further on in this site there is information relating to fund raising activities by RBS in the U.S.A. the previous year.   RBS were, in my opinion, chancing their arm, hoping that the $12 billion was sufficient whilst knowing that if the U.S financial situation deteriorated much further they would not have enough capital.  They were clearly misleading existing shareholders at this early point in the rights issue.

2. Fairly early on in the document (on page 11) there is a section headed RISK FACTORS.  In this section RBS detail all the various risk factors.  This is the section where they essentially think they cover themselves should anything go wrong.  They cover such topics as changes in interest rates, foreign exchange rates, credit ratings, depressed asset valuations resulting from poor market conditions, etc etc.  The even emphasise the fact that some of their debt was insured by “monoline” insurers and if these insurers’ financial situations deteriorated further it could have a big effect on RBS.  (How many of us at that time, or even now, knew what a “monoline” insurer was?)

On page 14 of this Risks section RBS even raised the potential problems of integrating ABN Amro into RBS and conclude this section with the statement “”RBS may not realise the benefits of the acquisition of the restructuring when expected or to the extent projected” i.e. they flagged up that there might be little or no benefit coming from their acquisition of ABN Amro.

Finally, on page 16 of these Risk Factors, they more or less threatened existing shareholders by saying that if RBS couldn’t complete the rights issue they would have to find other methods of raising the capital.  These methods, they state, could include a reduction of dividends, disposal of businesses (although they have said earlier on that they were not going to get rid  of their insurance businesses).  So the message to us all was clear.  If we didn’t subscribe to the Rights Issue our existing shareholding value was going to be under threat by changes to RBS’s credit rating and, to boot, we could lose our dividends.


The above are all issues which we now have some small understanding of simply because of the large amount of media attention now devoted to these issues.  However, at the time most of us unsophisticated investors had, I venture to say, no real understanding of them.  Nevertheless, when reading this Risk Factor section, the effect was to worry any potential investor about the risks and yet, at the same time, if we didn’t subscribe RBS, our shareholding and out dividends could be in trouble.   THEREFORE, THE BIG QUESTION IS, WHY DID WE AND OTHER PENSIONER/SHAREHOLDERS, AS WELL AS OTHER SMALL SHAREHOLDERS PUT MORE MONEY INTO THE RIGHTS ISSUE ?


Firstly, despite the risks identified in the Risks section, it was clear that RBS needed to raise the extra capital( at the time there was talk in the press of other major banks thinking about raising more capital) and it therefore seemed prudent to do so.  Afterall, RBS was our bank, we had worked for them (or our partner had worked for them).  We could surely trust the information they were giving us, and importantly, the validity of the information and figures we were being given and the interpretation being put on them by RBS.  Afterall, organisations like Merrill Lynch and Goldman Sachs were involved (and look how good they turned out to be!) and the figures were vetted by Deloittes.

Secondly, and very importantly given the scary risk factors detailed early on in the document, is the confidence giving “Letter From the Chairman of RBS”  commencing on page 24 of the prospectus.  In this letter the Chairman gives potential subscribers confidence by stating things like the following:

1. On page 26, in terms of Credit Market Exposures, he states that their estimates are based on “prudent assumptions reflecting the deterioration in market conditions etc” . Well, considering they raised £7 billion in the U.S.A. and were now seeking to raise £12 billion in the U.K., I guess they didn’t a very good job !

2. On page 27, under Dividends and Dividend Policy, he leads shareholders to believe that the dividend payout ratio will continue.  So things couldn’t be that bad, could they?

3. On page 28, under Capital, the Chairman states in paragraph 3 that risk weighted assets are expected to decline due to management actions leading to a positive impact of Tier 1 capital.  Importantly, given what the prospectus said in the Risk Factors section , the Chairman says, in paragraph 4 that “The anticipated disposal of ABN Amro assets during the first half of 2008 is expected to have a significant positive effect on RBS’s Tier 1 capital.  So ABN  weren’t a problem as hinted at in the “Risks” section were they?  In fact, ABN Amro was going to have a positive effect on RBS.

4. On page 29, under the Board and Management section, the letter boldly states that the Board of RBS had full confidence in it’s executive team to not only lead RBS through the then challenging conditions but also to deliver the transaction benefits relating to the acquisition of  ABN Amro etc,etc.  He also stated, very importantly given the financial chaos in the U.S.A. That “RBS has made significant changes to it’s North American management structure and has strengthened the  control environment within Global Banking & Markets. Certain structured credit activities have been discontinued and problematic US sub-prime mortgage-related assets are now managed by a dedicated work-out unit with a view to minimising risk and reducing positions at an appropriate pace”.   So the problems in the U.S. were under control then and we needn’t worry about this?

5. In subsequent sections on pages 29 to 31, the Chairman confidently reassured us that the future was bright.  ABN Amro was coming on well and integration benefits were slightly ahead of schedule and it expected to see integration benefits  totalling 2.3 billion Euros by 2010.  The U.K. Banking section was showing steady growth, the US had continued to achieve modest income growth. The Chairman further stated, in general terms, that although the outlook was inevitably clouded by the disruption to markets, most of the other areas of their Global Banking and Markets were making good progress.  His statement continues by stating that “the Group was in a stronger position to navigate through an economic environment that remains uncertain and well placed to take advantage of the growth opportunities to it”.

THE EFFECT OF THE CHAIRMANS’S LETTER WAS TO COUNTER EVERYTHING THAT WAS SAID IN THE RISK FACTORS SECTION and to give potential rights issue subscribers, especially loyal pensioner shareholders who had faith in RBS, that RBS had all of these risk factors covered.  We also believed that the figures and estimates contained in the offer were sensibly realistic given the the developing turmoil in the U.S.  It was obvious to nearly everybody, and certainly should have been to RBS, that the situation in the U.S.A. was going to continue to worsen.  Hence, we thought, the need to raise capital to cover this and further improve RBS’s capital position.  It has been shown in various recent television programmes and in the press, that the dire nature of the U.S. sub-prime market, and it’s likely effects on the derivatives and bond markets, were already being discussed before April 2008.  Yet, RBS’s rights issue prospectus was framed in the terms it was.  IN MY VIEW, DELIBERATELY MISLEADING.

Other Facts

1. An American woman has taken legal action against RBS in the U.S.A. in respect of a R.B.S. bond issue in June 2007 in which RBS raised $10 billion.   Her allegations exactly mirror my own even to the extent of mentioning the ABN Amro situation.  Importantly, this lady is seeking the Judge’s approval to up-grade her action to that of a “Class Action”.  If we can get our Class action going I image there will be some synergy between her case and ours.
Question:   Why was the fact that RBS had raised $10 billion in the U.S.A. in June 2007 not mentioned in the rights issue prospectus in early 2008?  It would certainly have altered me wife’s and my attitude if we had know that fact alone.

2. I have also read in a newspaper report that the Chief Executive of L & G, a very large investor, has said that even a few weeks before the rights issue RBS were still denying that they needed to raise any more capital.  He further stated that, after the rights issue that, despite the growing concerns of L & G, that they found it impossible to get people at RBS to talk to them to explain what they were doing.

My Conclusion

I believe that RBS have deliberately, and perhaps criminally, misled shareholders which resulted in our investing further in the RBS rights issue.  This is tantamount to fraud.

It is therefore my intention, through this web site, to try and contact other shareholders with the aim of forming a group whose aim would be to raise the necessary funding which will be necessary to take legal action, in the form of a “Class” action, against RBS.  I know that many of you will agree with the views expressed in this web site but who will be put off by the scale of the funds we would have to raise BUT we shareholders number thousands and the amount required from us individually in order to take this action would be relatively small, especially compared to the losses we have all incurred.

I would be delighted to hear from anyone who believes, as my wife and I do, that RBS, particularly the directors at the time of the rights issue, need to be brought to account and made to compensate us for the losses we have incurred.




I hope that many of you will be up for this fight and will wish to subscribe to a fighting fund.  If you are, please contact me at the email address above.

Michael Lamoureux                                    15th February 2009

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