Lloyds sued for misleading U.S. investors
Despite the fresh calendar on the wall, echoes of the 2008 financial crisis already are reverberating in the new year. Lloyds Banking Group is under fire from a putative class of American shareholders alleging the British bank and its executives misled them over the bailout of fellow financial services company...
January 03, 2012 at 06:02 AM
3 minute read
The original version of this story was published on Law.com
Despite the fresh calendar on the wall, echoes of the 2008 financial crisis already are reverberating in the new year. Lloyds Banking Group is under fire from a putative class of American shareholders alleging the British bank and its executives misled them over the bailout of fellow financial services company HBOS in 2008.
Lloyds' board of directors is accused in the lawsuit of making misleading statements about its takeover of HBOS, which the government orchestrated. At the time, Lloyds then-CEO Eric Daniels hailed the move as a “fantastic opportunity to create the U.K.'s leading financial services group and create value for both sets of shareholders.”
Things, however, didn't turn out as rosy as Daniels predicted. Just weeks later, Lloyds accepted a government bailout in order to receive a £17 billion influx in exchange for a 43 percent stake in the business.
According to the suit, Lloyds shareholders were not informed about the woeful state of HBOS' finances, which only came to light after HBOS posted a £10 billion loss in February 2009, thereby immediately plunging Lloyds shares 32 percent on the London Stock Exchange. The shareholders also claim that HBOS was insolvent within weeks of the takeover being announced, and was reliant on funds from the Bank of England and the U.S. Federal Reserve Bank to keep its head above water. All of this information, the shareholders allege, was withheld.
For more, read Reuters.
Despite the fresh calendar on the wall, echoes of the 2008 financial crisis already are reverberating in the new year. Lloyds Banking Group is under fire from a putative class of American shareholders alleging the British bank and its executives misled them over the bailout of fellow financial services company HBOS in 2008.
Lloyds' board of directors is accused in the lawsuit of making misleading statements about its takeover of HBOS, which the government orchestrated. At the time, Lloyds then-CEO Eric Daniels hailed the move as a “fantastic opportunity to create the U.K.'s leading financial services group and create value for both sets of shareholders.”
Things, however, didn't turn out as rosy as Daniels predicted. Just weeks later, Lloyds accepted a government bailout in order to receive a £17 billion influx in exchange for a 43 percent stake in the business.
According to the suit, Lloyds shareholders were not informed about the woeful state of HBOS' finances, which only came to light after HBOS posted a £10 billion loss in February 2009, thereby immediately plunging Lloyds shares 32 percent on the London Stock Exchange. The shareholders also claim that HBOS was insolvent within weeks of the takeover being announced, and was reliant on funds from the Bank of England and the U.S. Federal Reserve Bank to keep its head above water. All of this information, the shareholders allege, was withheld.
For more, read Reuters.
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