More than 5,000 investors have joined a class action against Lloyds Banking Group, claiming they lost £400m in the HBOS takeover.
The FT reports law firm Harcus Sinclair, which is representing the investors, says the group of claimants has grown by about a third by number of shares owned in a fortnight.
Investors who held shares in Lloyds at the time of the HBOS deal six years ago have until 19 November to sign up to the legal action, and lawyers believe the number of claimants could double.
As well as suing Lloyds, the lawsuit names Sir Victor Blank, the bank’s former chairman, and Eric Daniels, its former chief executive, as defendants.
Also targeted are Tim Tookey, the bank’s former finance director, Truett Tate, its former head of wholesale banking, and Helen Weir, its former retail banking boss.
The shareholders argue they were misled into approving the HBOS merger as key information over the true financial health of the bank was withheld. Lloyds is due to file its defence by early December and a trial could start as early as 2016.
The group claims that £25bn of emergency support from the Bank of England for HBOS and $18bn from the US Federal Reserve was not disclosed.
Harcus Sinclair director Damon Parker says 10,000 investors have started the registration process and holders of more than 400m shares have signed up so far.
He says that if successful, the investors would be owed about £1 per share in compensation for the dilution they suffered in the 2008 rights issue. Holders of about six billion shares could qualify for the legal action, which is being brought under a group litigation order.
Lloyds says it does not consider there to be any legal basis to the claims and will “robustly contest” the action.