Thousands of shareholders sue Royal Bank of Scotland for $7.5b

LONDON (AP) - Shareholders of the Royal Bank of Scotland (RBS) have filed a 4 billion pound (S$7.5 billion) lawsuit against the company, claiming they were misled into thinking the bank was healthy just before its collapse.

A group representing 12,000 investors said on Wednesday that the bank did not include vital information in the prospectus for a 12 billion-pound share sale that took place just a few months before RBS was bailed out by the government.

The bailout diluted the holdings of existing shareholders and the stock plunged, slashing the value of their holdings. The bank is now 82 per cent owned by the British government.

The group said in a statement that the lawsuit names former chief executive officer Fred Goodwin and three other directors, as well as the bank itself, as defendants.