US investors take ex-Lloyds chiefs to court over HBOS deal
02 January 2012
Former bosses of the Lloyds Banking Group will have to defend themselves in American courts in the new year as shareholders angry at the bank's takeover of HBOS at the peak of the credit crisis launch proceedings.
A class action in the southern district of New York has named Sir Victor Blank and Eric Daniels, former chairman and chief executive, respectively, of Lloyds, along with the bank itself. The board will have to defend itself against charges of making misleading statements about the quality of the transaction.
Lloyds had to be bailed out by the British taxpayer following the announcement of the deal in 2008.
The lawsuit comes as pressure mounts for a report on HBOS's collapse, which would be published by the Financial Services Authority. According to Lord Myners, the former City minister, taxpayers deserved to see an account into its demise, since the enlarged group continued to rely on the government, which has a 41 per cent stake in Lloyds.
Victor and Daniels have been charged with violations of parts of the US Exchange Act and, according to the class action, "wrongful conduct" which led to "false and/or misleading statements" being issued.
Albert Ross of Louisiana, an investor in the bank's New York-listed American depositary receipts, has moved the court through his solicitors.
In another move, a British shareholder group, Lloyds Action Now, is contemplating bringing its own claim.