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Lloyds action group launches £14bn compensation bid

A group of Lloyds shareholders are preparing to take legal action against the Treasury and Lloyds TSB directors after claims that vital information was withheld regarding HBOS’s finances.

According to reports, the shareholders feel aggrieved that they were not informed about the size of the loan that the Government lent to HBOS in October 2008, and claim they were misled into voting for the HBOS takeover. The loan is believed to be around £25.4bn and was not disclosed until November 2009.

About 500 shareholders have now joined the group, called Lloyds Action Now, which aims to recover some of the £14bn lost in the value of their shares after the merger.

The group has sent demands for compensation to the Treasury and Lloyds directors, and it has given 90 days for a response before the group takes legal action.

In April, Lloyds announced that it had returned to profit in the first quarter of 2010, although there were no precise figures in the management statement.

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There are 21 comments at the moment, we would love to hear your opinion too.

  1. One of my first actions when commencing business in 1980 was to place all clients funds in Trust, I therefore cannot understand how any firm handing clients money has not done the same. Bearing in mind the special status and importance given by the FSA.

    Equally with all the staff compliance power at the FSA, it beggars belief that regulated business’s exist in 2010 that have still not segregated clients funds.

    So who is to be fired, disciplined or rewarded at the FSA.

    That said, the fine for an assumed risk is very much over the top. Equally it is little wonder the Government want ride of the FSA.

  2. I assume M J Winfield meant to post a comment about the Close Brothers fine but selected the wrong topic in error. However, if a firm sets up bank accounts incorrectly like Close Brothers did, why automatically assume it’s the fault of the FSA?

    The only way such an error could be spotted by the FSA would be if you had FSA staff going through checking every single operation, piece of paper and transaction undertaken by firms. Which clearly isn’t practical.

    On something like this, the FSA have clearly set out rules requiring segregated bank accounts which Close Brothers didn’t bother to adhere to. Hence the fine.

  3. Khalid Schofield 7th June 2010 at 1:01 pm

    I hold a large number of Lloyds shares (tens of thousands) I am one of those who have been effected by the HBOS / Lloyds merger. But after looking at https://lloydsactionnow.com/ they demand up front money and a percentage of my lloyds portfolio. Seems more like a scam.

    I’ll hold out for my Lloyds shares to pick up rather than a messy court case

  4. Mr Schofield you have not read the documentation properly.

    Whether you join LAN which is by LTSB shareholders for LTSB shareholders to recover our losses and not to make a profit is up to you but note that NO percentage of your award is sought. The opposite.

  5. The attitude of some is incredible.

    Lloyds Action Now was set up by Lloyds TSB shareholders who lost a lot of money following the merger of that bank with HBoS. It is an association by LTSB shareholders for LTSB shareholders and in terms of its constitution may not make any profit. It is not a business.

    It is difficult to comprehend how anyone could waste their time submitting a comment which is inaccurate and demonstrates a complete lack of research.

    The website names chartered accountants, counsel, (from three leading chambers in London) and two top London firms of solicitors, the association’s banking details – yet it is suggested that the campaign is a “scam”.

    Really – drink another glass of vinegar.

  6. Does anyone know if the comment about not being able to claim later privately if you don’t join in now on LAN FAQs is 100% accurate? I recall something about group actions being in the Financial Servcices bill but this was later rejected.

  7. At 3p per share, if everyone entitled joined how much would that be?
    Add the membership fee of £225 per member and wow, someone’s gonna make a fortune.
    And I doubt it will be this shareholder

  8. I also received a letter from LAN yesterday. I am only a layman when it comes to finances, and compared to some have a moderate shareholding. However, I can’t see how the compensation anticipated is greater than the value of the shareholding. If everyone claimed would the bank not have to pay more than it is worth in compensation? I am worried if I do join it is money for nothing, and if I don’t, others will profit at the expense of my share value when it comes crashing down. I will be looking on with interest – yours… confused :0S

  9. I’m not convinced that for small share holders liked me the compensation, if it is awarded at all, is really worth the gamble of investing cash up front. 2000 shareholder each paying £300 does not really provide all that much of the specialised and expensive expertise required, especially since Lloyds have promised a vigourous defence. These legal eagles think nothing of paying £1000 for a bottle of wine! Put the money in your ISA!

  10. Mr Knowles

    I am a retired senior executive and MD of Lloyds, and I have been advising LAN on a pro bono basis.

    The compensation payments is approximately £2.50 based on the fall in the share price plus interest etc calculated from the date that the full facts, which were not disclosed, were known. This assumes that you were a shareholder at the time of the merger, there are other classes of shareholder who made losses based on a false prospectus of course. Why was it false?
    Firstly because it failed to disclose that the Bank of England was making a secret £25.4 bn loan to HBOS, whilst all UK banks were receiving some assistance the quantum of it was known, this was not. Secondly it transpires that Lloyds had given an unconditional indemnity to the Treasury!! If these facts had been disclosed in the prospectus it is far from certain that the Institutions would have voted it through. If you have other questions there is a pretty good FAQ section on the LAN website
    http://www.lloydsactionnow.com/Forms/Default.aspx

  11. Will someone answer Jack’s question.
    This is important to many who have lost everything and cannot afford to join.

  12. This is a complex case Jack which requires a great deal of preparation, legal counsel etc, so unless you are in significant funds it is simply not possible.

    If you had 100,000 shares (which I use as an example only) LAN membership would cost you £264.38 plus 100,000 x 0.03525 = (about) £3,800. Taking action as an individual with that amount will not even get you through the initial steps of collating documents , instructing a solicitor to consider who will then need to seek advice from a specialist banking counsel. Our research has been long, hard and expensive and the result (albeit in its anodyne version, to ensure we are not disclosing all our cards to Lloyds ) is available to all who join LAN.

    So taking on the case as an individual is simply not financially feasible. The defendants know this and rely on it.

    Secondly, the courts are unlikely to allow a further case to proceed on the same issue as a multiplicity of actions cannot be allowed otherwise the courts would be overwhelmed and could not practically cope with what are essentially the same facts and issues in dispute.

    The defendants would argue your case has already been pursued by LAN and you had the opportunity to join but chose not to as you were notified of their existence.

    If LAN proceeds to a mediation it can and will only represent those who authorise it to reprsenet them; ie LAN members. The mediation and terms of any settlement will be completely confidential and subject to strict non disclosure.

    LAN, the lawyers etc, will all have to give an undertaking NOT, directly or indirectly, to “phoenix” a claim on the back of the settlement.

    It is also possible (although not guaranteed) that LAN and the defendants agree to a Group Litigation order being made and if you do not then assert your claim you will have legal difficulties in further pursuing your claim.

    If a settlement is achieved then it is highly likely that the non-participant will not benefit. It is difficult to imagine why the defendants would want to offer to pay a person who has not made a claim especially where they had the opportunity to join the association but declined to do so.

    In the US they have a different system where you are in unless you opt out. Here you are only in if you opt in.

    You should also read the following letter printed in the FT recently :
    http://www.ft.com/cms/s/0/6916a082-eebf-11df-9e95-00144feab49a,_i_email=y.html

    In order to stand a credible and real chance of fighting the bank we need every shareholder to stand behind the Association to give it strength .Sitting on the fence will not suffice I am afraid as the claims will become time barred and no compensation will ever be forthcoming.

    In all things timing is crucial and timing could not be better for us than now.

    Wayne

  13. Peter re Jack’s question I have posted a full response to this which for some reason has not been posted. If you/Jack wish to email me at waynekit@mac.com I will gladly send you the response.

  14. Can not understand why there are not thousands more shareholders joining LAN.
    Come on everyone lets pull together and win this one.
    Cheers! John.

  15. John, the problem has been contacting up to 800,000 shareholders and the cost of so doing, raising the publicity and the number of people who believe the whole thing is a scam when 10-15 mins reading the LAN website and the professional names involved would make it clear that this is untrue. Also far too many shareholders have lost so much as a result of the HBOS acquistion, which of course is the cause of the action, that they dare not risk spending more. Also I believe that too many people think that they can sit on their hands and any compensation will come their way as a matter of course. As my post of 25th November makes clear this is extremely unlikely!!

  16. I work for LTSB in a high street branch and have spoken to my manager and several colleagues about this, none of them have received letters from LAN as I have, despite being shareholders for many years. The unofficial line has been to tell customers that ask about it that we have no knowledge of LAN, its nothing to do with the Bank and that “if you ask me it sounds like a scam” it doesnt help that letter are printed on paper with a black horse logo which staff then confirm is not official headed paper and “could have been printed on a PC by anyone” – personally I am not sure what to do regarding my own shares. This may be why take up is only 500 as branches up and down the country are probably giving this advice. The Bank have issued no guidance on this except a small announcement on the Intranet saying that LAN are not part of LTSB.

  17. Anonymous

    Can I suggest that if you have read all the posts on this blog you would be better informed also that if you are genuinely interested that you look at Lloyds Action Now https://lloydsactionnow.com/Forms/Default.aspx and look at the Professionals tab, that should make it quite clear that it is not a scam. The quality of the paper is a side issue and reflects the need to keep costs to a minimum , the logo has been changed to a bull which is more appropriate. In any event is it likely that an action group seeking redress against the directors of the bank would be a subsidiary of Lloyds!!?? Many thousand of your colleagues have had their SAYE savings decimated, perhaps you have too, by the action of Lloyds Directors , and you are guaranteed anonymity if you join as are all retired Lloyds employees.
    Finally take up is in the thousands and that is just in the UK their are shareholders in the USA where action is also being taken.

  18. i held 10762 shares in lloyds plc decmber 09 and my loss was £40415-84

  19. AT DECEMBER 09 WE HELD 14262 SHARES IN LLOYDSBANK PLC AND LOSSES BEING £57240.92 THIS BEING OUR PENTION ,CAUSED CONCIDERABLE PAIN

  20. Unfortunately I clicked on register for LANA. But the more I read the more comvinced I became this is a SCAM. There is no telephone number to contact them and the address on the outside of the evelope said return to Norwich but they are located in Reading?? As I didn’t cancel membership within seven working days a year on they have sent a threatening letter saying court action will be taken if I do not pay the membership fee by early 2012. They say they have done work for me. But how can this be as I have signed nothing and have not sent any documentation apart from stating the number of share I have. The small number of share I have I would lose most of the compensation, so did not take it any further. Avoid them like the plague

  21. Is this group still taking members. I have only just heard about the group and have never been contacted by anybody. i don’t have many shares but did buy just before the merger.

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