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Lloyds Shareholders To Sue Over Hbos Deal

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7145022.ece

The Treasury, Sir Victor Blank and Eric Daniels could be sued for £14 billion by aggrieved Lloyds Banking Group shareholders over the HBOS merger.

A group known as Lloyds Action Now claims that the former Chancellor Alistair Darling and Lloyds TSB directors unlawfully withheld vital information about HBOS’s finances when shareholders were considering whether to back the group.

They have sent demands for compensation on behalf of test claimants to the Treasury, Sir Victor Blank, former chairman of Lloyds, and Eric Daniels, chief executive of the bank.

The shareholders claim they were misled into voting in favour of a takeover of HBOS as they did not realise the size of the £25.4 billion loan the government had made to the bank.

Lloyds investors have lost £14 billion between them in total. Dividend payments have been suspended until at least 2012.

Around 500 shareholders have already joined the group. A campaign to recruit more of Lloyds’ 800,000 shareholders will start in Reading on Wednesday.

The Treasury now has 90 days to respond before the group takes formal legal action.

Jim Rai, head of litigation at Winckworth Sherwood, who are acting for Lloyds Action Now, said: “We would prefer not to pursue a case based on deceit but as presently instructed we cannot see how this can be avoided.

“There can be no doubt that the fact of the £25.4 billion loan was not only being kept secret for the possible advantage of the UK banking system, but was deliberately kept secret so that LloydsTSB shareholders were not put off the proposed acquisition of HBOS.”

Alice Beer, the broadcaster and former BBC TV Watchdog presenter, said: “There are 800,000 shareholders in total who have been hugely affected by what has happened.

The lawyers can sense the fees, they are going to get rich. Whether the shareholders get anything is irrelevant.

Why haven't Gordon Brown and Darling been listed as well as the BoE?

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From the "Lloyd's Action Now" website:

There will be a joining fee of £225 plus VAT and £0.03 plus VAT per share held by you as at December 2009.

:lol: They are such lowlifes, they even try to screw money off each other.

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7145022.ece

The lawyers can sense the fees, they are going to get rich. Whether the shareholders get anything is irrelevant.

Why haven't Gordon Brown and Darling been listed as well as the BoE?

To be fair, they do have a point, and people on here at the time were saying Lloyds buying HBoS was a stupid decision and that Brown must have had something (blackmail) on the Lloyds board to get them to agree to it.

The bank had tens of billions of super-secret-don't-tell-anyone loans from the BoE when Lloyds bought it... if LLoyds shareholders had known the HBoS was basically bankrupt they wouldn't have signed up.

Welcome to the rule of unintended consequences.

Secret loans, plus bank mergers = fraud.

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:lol: They are such lowlifes, they even try to screw money off each other.

Yeah, well. Someone has to pay the legal fees. And it's a pretty small price to pay, considering the size of the losses shareholders would be sitting on.

The point is that Lloyds was a sound company, with good liquidity, good credit rating and lots of good quality well performing loans which would be expected to continue to provide good profit long into the future.

HBos, we now know, was a total disaster area. This should have been immediately apparent, by the huge bailout loan from the BoE. But as this vital piece of information was not given to shareholders at the time of the vote, they could not make an informed decision on the state of HBoS. It seems quite clear that the shareholders were misled as to the soundness of HBoS. If they can find evidence that the govt deliberately with held information about the HBOS balance-sheet and bailout, then I would have thought that this would be clear evidence of impropriety.

I know of a few people on this forum who were burned by this - they had bought Lloyds shares on the basis of their sound balance sheet - only to see their investment wrecked as the merger was announced.

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Yeah, well. Someone has to pay the legal fees. And it's a pretty small price to pay, considering the size of the losses shareholders would be sitting on.

The point is that Lloyds was a sound company, with good liquidity, good credit rating and lots of good quality well performing loans which would be expected to continue to provide good profit long into the future.

HBos, we now know, was a total disaster area. This should have been immediately apparent, by the huge bailout loan from the BoE. But as this vital piece of information was not given to shareholders at the time of the vote, they could not make an informed decision on the state of HBoS. It seems quite clear that the shareholders were misled as to the soundness of HBoS. If they can find evidence that the govt deliberately with held information about the HBOS balance-sheet and bailout, then I would have thought that this would be clear evidence of impropriety.

I know of a few people on this forum who were burned by this - they had bought Lloyds shares on the basis of their sound balance sheet - only to see their investment wrecked as the merger was announced.

As with any company, the shareholder takes the risk... which, theoretically, should be after assessing whether the directors of the company they are investing in are competent people who will perform due diligence when it is necessary.

Investors should check that the Directors are sound, not just the balance sheet.

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Guest absolutezero

Yeah, well. Someone has to pay the legal fees. And it's a pretty small price to pay, considering the size of the losses shareholders would be sitting on.

The point is that Lloyds was a sound company, with good liquidity, good credit rating and lots of good quality well performing loans which would be expected to continue to provide good profit long into the future.

HBos, we now know, was a total disaster area. This should have been immediately apparent, by the huge bailout loan from the BoE. But as this vital piece of information was not given to shareholders at the time of the vote, they could not make an informed decision on the state of HBoS. It seems quite clear that the shareholders were misled as to the soundness of HBoS. If they can find evidence that the govt deliberately with held information about the HBOS balance-sheet and bailout, then I would have thought that this would be clear evidence of impropriety.

I know of a few people on this forum who were burned by this - they had bought Lloyds shares on the basis of their sound balance sheet - only to see their investment wrecked as the merger was announced.

I would have sold my investment as soon as the news was announced and bought it back afterwards had the deal not gone ahead.

I'm surprised the financial whizzes on here didn't smell a rat.

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I would have sold my investment as soon as the news was announced and bought it back afterwards had the deal not gone ahead.

I'm surprised the financial whizzes on here didn't smell a rat.

There was barely enough time even to smell a rat.

Lloyds saw a chance to increase it's market share - something they had already been trying to do via a takeover before the banking crisis. No responsible bank director would have agreed to the HBOS takeover in such a hasty fashion; but greed took over and Lloyds rushed into it without doing the background checks.

It's not enough for Lloyds to complain that they 'weren't told'. Their haste in the takeover did not give enough time for due diligence. If there were problems there to be found, a cautious audit would have revealed them, and that takes time. Fools rush in, as they say.

As for investors, we have all seen how the banks, including HBoS, have essentially blackmailed the government and taxpayer for a bailout, which was provided in the expectation and intention that the funding would allow relatively normal lines of credit for business. Instead, the banks have witheld credit and many otherwise viable businesses are going to the wall. Bank directors are not paragons of virtue, they are polecats.

For those who choose to ignore how banks are currently making their money, or agree with it, I have no sympathy when their investment turns out to be less lucrative than they hoped.

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7145022.ece

The lawyers can sense the fees, they are going to get rich. Whether the shareholders get anything is irrelevant.

Why haven't Gordon Brown and Darling been listed as well as the BoE?

So did Sir Victor issue a blank cheque when he shouldn't have done?

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Back in July 2008 I bought some Lloyds TSB shares at the suggestion of an acquaintance who was a 'fund of fund' manager. His reasoning was that all the banks' share prices were depressed due to the exposure of dodgy lending practices, but Lloyds TSB's loan book was far less dodgy than the others and therefore its shares were underpriced. I agreed with this assessment and so I bought the shares. Shortly afterwards Lloyds TSB bought HBOS, its share price collapsed and the rest is history.

Now, I take complete responsibility for my decision to buy those Lloyds TSB shares. As we all know, investments can go down as well as up and there can be no whining when they do just that.

When I saw the news story about 'Lloyds Action Now' I was interested enough to sign up for their newsletter. Although obviously I would like to reverse some of my losses, on a superficial reading of their website it doesn't seem that they are likely to succeed (DOI: I know very little about law). They've just sent me another newsletter reporting their progress but I can't see that they're any further forward.

Is anybody on here better informed or better qualified to comment on their chances of success?

Cheers

Will

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Back in July 2008 I bought some Lloyds TSB shares at the suggestion of an acquaintance who was a 'fund of fund' manager. His reasoning was that all the banks' share prices were depressed due to the exposure of dodgy lending practices, but Lloyds TSB's loan book was far less dodgy than the others and therefore its shares were underpriced. I agreed with this assessment and so I bought the shares. Shortly afterwards Lloyds TSB bought HBOS, its share price collapsed and the rest is history.

Now, I take complete responsibility for my decision to buy those Lloyds TSB shares. As we all know, investments can go down as well as up and there can be no whining when they do just that.

When I saw the news story about 'Lloyds Action Now' I was interested enough to sign up for their newsletter. Although obviously I would like to reverse some of my losses, on a superficial reading of their website it doesn't seem that they are likely to succeed (DOI: I know very little about law). They've just sent me another newsletter reporting their progress but I can't see that they're any further forward.

Is anybody on here better informed or better qualified to comment on their chances of success?

Cheers

Will

I'm certainly not better-qualified than you to comment. But I share your interest, having bought at much the same time as you. I too took the hit the day the HBoS suicide-pill was announced, but managed to sell at a profit the day the shorting ban sent the shares briefly soaring. The experience turned me from purely a long-term investor to a trader, as I was able to take advantage of my flexibility as an individual, over funds constrained by their rules to trade at bad times (Income funds forced sellers when the dividend died; ETFs forced to sell low/buy high).

I think there has to be a good case, based on the con trick that was pulled on shareholders at the time of the vote on taking on HBOS (I was again a shareholder when that happened, having bought back in a lot cheaper). I recollect blogging about it when the details came out:

Today’s news about the government supplying an additional £60 billion to the Scottish banks last autumn is shocking, but not surprising. The explanation is that it was done on the quiet so as not to damage confidence. Or in other words, it was a con trick. We hear they repaid the money a few months later: it’s not yet specified, but I guess they drew on the funds that are now taxpayer shareholdings.

Now I’m no lawyer, but I understand that obtaining money by deception is fraud, and is a serious crime. That’s why public companies are required to publish accounts and to have them audited: so that people dealing with them can assess the financial risks in doing so. That includes shareholders. Was anyone who bought RBS or HBOS shares while the loans existed defrauded? Seems like they should have a case.

But the time that was happening was also the time when safe-and-solid Lloyds bank, with an excellent dividend but without the spectacular gamblers’ returns of the Scottish banks, was taking over the zombie HBOS – the biggest basketcase of all. Lloyds went from being the healthy bank that hadn’t needed a rights issue to being itself a basketcase needing a government bailout. Contrast Barclays: they were in worse shape than Lloyds pre-crash, but came out on top by buying Lehman’s assets from the receiver, as Lloyds should’ve done with HBOS.

We know Lloyds shareholders were seriously shafted by some combination of Lloyds own board and government pressure. But Lloyds shareholders also had a vote. Not a very useful vote, given that the big institutional shareholders were also HBOS shareholders who stood to see those holdings wiped out. But nevertheless a vote, and that was taken in the absence of financial information that was clearly as relevant as it was huge.

The inescapable conclusion seems to be, Lloyds shareholders were defrauded. Massively!

I was a Lloyds shareholder myself when all this started, and indeed, these shenanigans turned me from a long term buy-and-keep shareholder to a trader, as I took advantage of the wildly-fluctuating market. Since I’ve made a net profit trading Lloyds shares during and since the crash, I’d be hard-pressed to demonstrate a loss, so I don’t see mileage in my joining a class action, or anything else that might be about to happen. But I can still be pissed off by this dishonesty.

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Share prices may go down as well as up, and you may not get back the amount you originally invested. But you won't lose any more than that. So buying shares is tantamount to betting. Share prices can go up as a result of the same spurious, greedy, underhanded, wheeler-dealing and sharking that made them go down in this case, but there are no cries of 'foul' from shareholders then. My advice to shareholders: you win some, you lose some. Get over it. Now go do something useful, like plant a tree.

And as for lawyers...grrr...I've shat 'em. Put them all in a wicker man.

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I must admit if I had been a Llyods shareholder at the time I would have been pretty dark about the decision to takeover HBoS. It really was government theft of the residual value in Llyods; they had, up until that point, been one of the more prudent lenders with their shareholders suffering for it over the previous decade. To have that sound longer term strategy destroyed in the way it was is criminal. There is little difference between what was foisted onto Llyods to what has been foisted onto the savers and prudent. Moral hazard doesn't even come close.

Edited by Tiger Woods?

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Clearly there are some people on this thread ignorant of disclosure requirements, and for that I forgive them their silly comments.

Not only were Lloyds shareholders lied to during the voting process:

1 ) small shareholders were railroaded into the deal by institutional holders who held just as many HBOS shares which they wished to shore up;

2 ) the deal was announced in the main stream media before an RNS announcement by Robert Peston. This in itself is contrary to the city code. The announcement however was made in such a manner as to make it sound like a done deal. The poor terms of the merger and the finality of the announcement collapsed Lloyds shares immediately, trapping long term shareholders (who I believe, we are supposed to favour);

3 ) many knowledgeable investors pointed out that the deal was ILLEGAL as it broke monopolies regulations. It was therefore perfectly sensible for them to hold their shares whilst the watchdog deliberated and threw the deal out (which would have restored their balance sheet, drove out the lunatic directors and thus restored Lloyds' status). Little did they know that Brown would use some obscure bent definition of the law to push the deal through under emergency measures.

4 ) in the light of the above it was beyond ordinary shareholders belief that the vote would pass. And yet it did.

To class this as business risk is to fail to understand even the smallest aspect of company law.

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I think there has to be a good case, based on the con trick that was pulled on shareholders at the time of the vote on taking on HBOS (I was again a shareholder when that happened, having bought back in a lot cheaper). I recollect blogging about it when the details came out:

Quote

Today’s news about the government supplying an additional £60 billion to the Scottish banks last autumn is shocking, but not surprising. The explanation is that it was done on the quiet so as not to damage confidence. Or in other words, it was a con trick. We hear they repaid the money a few months later: it’s not yet specified, but I guess they drew on the funds that are now taxpayer shareholdings.

Now I’m no lawyer, but I understand that obtaining money by deception is fraud, and is a serious crime. That’s why public companies are required to publish accounts and to have them audited: so that people dealing with them can assess the financial risks in doing so. That includes shareholders. Was anyone who bought RBS or HBOS shares while the loans existed defrauded? Seems like they should have a case.

But the time that was happening was also the time when safe-and-solid Lloyds bank, with an excellent dividend but without the spectacular gamblers’ returns of the Scottish banks, was taking over the zombie HBOS – the biggest basketcase of all. Lloyds went from being the healthy bank that hadn’t needed a rights issue to being itself a basketcase needing a government bailout. Contrast Barclays: they were in worse shape than Lloyds pre-crash, but came out on top by buying Lehman’s assets from the receiver, as Lloyds should’ve done with HBOS.

We know Lloyds shareholders were seriously shafted by some combination of Lloyds own board and government pressure. But Lloyds shareholders also had a vote. Not a very useful vote, given that the big institutional shareholders were also HBOS shareholders who stood to see those holdings wiped out. But nevertheless a vote, and that was taken in the absence of financial information that was clearly as relevant as it was huge.

The inescapable conclusion seems to be, Lloyds shareholders were defrauded. Massively!

I was a Lloyds shareholder myself when all this started, and indeed, these shenanigans turned me from a long term buy-and-keep shareholder to a trader, as I took advantage of the wildly-fluctuating market. Since I’ve made a net profit trading Lloyds shares during and since the crash, I’d be hard-pressed to demonstrate a loss, so I don’t see mileage in my joining a class action, or anything else that might be about to happen. But I can still be pissed off by this dishonesty.

It does seem obvious that there was a deception. However, what is obvious and what can be proved in a civil court of law are not necessarily the same thing. What concerns me about Lloyds Action Now is that for a deception this obvious, the documentary evidence that they need to prove their case should be very easy to find. If they haven't found any such documentation by now then I suspect that they never will and thus they will not be able to prove what they need to prove in court.

A second issue is what happens if they do succeed? The damages Lloyds Action Now are seeking won't be paid by the (ex-)directors personally, they'll be paid by Lloyds itself, i.e the shareholders, which in many cases will be members of Lloyds Action Now. Effectively they'll be paying their own damages.

I would very much like Lloyds Action Now to succeed, both for financial reasons and to see wrongdoers held to account, but I just can't see it happening.

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7145022.ece

The lawyers can sense the fees, they are going to get rich. Whether the shareholders get anything is irrelevant.

Why haven't Gordon Brown and Darling been listed as well as the BoE?

...the shareholders were responsible for the Lloyds Board....the Board ordered the due diligence of HBOS...they failed ...sue the Board members of the time individually .... :rolleyes:

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This was a shocking deal at the time, swiftly brokered over cocktails by Brown (in 'saving the world' mode) and (Sir) Victor Blank. Weren't Lloyds generally regarded as a good bank who stayed out of the mortgage free-for-all? A hastily arrange, iffy deal... apparently it was voted through by shareholders. HBoS was a basket case, shouldn't have been touched with a barge pole. The irony of course is that if banks were allowed to fail (like any normal badly run business), the soundly run enterprises would have picked up the pieces, which is how the market functions.

That said, I'd be surprised if the shareholders got anywhere. Not one banker has been done for fraud, indeed the people who messed up continue to do well (pensions, new jobs... ) - hasn't Crosby, the guy who ******ed up HBoS just landed the CEO role at Boots? You couldn't make it up. We live in a banana republic/

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This was a shocking deal at the time, swiftly brokered over cocktails by Brown (in 'saving the world' mode) and (Sir) Victor Blank. Weren't Lloyds generally regarded as a good bank who stayed out of the mortgage free-for-all? A hastily arrange, iffy deal... apparently it was voted through by shareholders. HBoS was a basket case, shouldn't have been touched with a barge pole. The irony of course is that if banks were allowed to fail (like any normal badly run business), the soundly run enterprises would have picked up the pieces, which is how the market functions.

That said, I'd be surprised if the shareholders got anywhere. Not one banker has been done for fraud, indeed the people who messed up continue to do well (pensions, new jobs... ) - hasn't Crosby, the guy who ******ed up HBoS just landed the CEO role at Boots? You couldn't make it up. We live in a banana republic/

...Lloyds were a good bank until their Chairman reacted to Browns panic over HBOS....friends in the wrong places Gordo and Bank Chairmen ...what a mix !.... Andy Hornby the ex head of HBOS now leaving Boots ....he was the CEO who didn't have a clue but sold a dummy to Lloyds ...is this a good or bad salesman...before HBOS he worked at Asda ....great Banking experience....now retail is too much for him...Boots are still looking.....be very careful out there .... :rolleyes:

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...Lloyds were a good bank until their Chairman reacted to Browns panic over HBOS....friends in the wrong places Gordo and Bank Chairmen ...what a mix !.... Andy Hornby the ex head of HBOS now leaving Boots ....he was the CEO who didn't have a clue but sold a dummy to Lloyds ...is this a good or bad salesman...before HBOS he worked at Asda ....great Banking experience....now retail is too much for him...Boots are still looking.....be very careful out there .... :rolleyes:

Ah Hornby (corrected)..

Crosby is the other bankster, and the less said about the man formerly known as a banker, Goodwin.

The Lloyds merger was an absolute stinker of a decision. The hallmark of the financial crisis being that after years of ignoring the maths and the obvious problems of sustainability and fraud, political expediency and vested interest cooked up schemes that could only be got through in the blink of an eye (panic), proper scrutiny would have stopped them in their tracks.

Edited by tinker

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There was barely enough time even to smell a rat.

Lloyds saw a chance to increase it's market share - something they had already been trying to do via a takeover before the banking crisis. No responsible bank director would have agreed to the HBOS takeover in such a hasty fashion; but greed took over and Lloyds rushed into it without doing the background checks.

It's not enough for Lloyds to complain that they 'weren't told'. Their haste in the takeover did not give enough time for due diligence. If there were problems there to be found, a cautious audit would have revealed them, and that takes time. Fools rush in, as they say.

As for investors, we have all seen how the banks, including HBoS, have essentially blackmailed the government and taxpayer for a bailout, which was provided in the expectation and intention that the funding would allow relatively normal lines of credit for business. Instead, the banks have witheld credit and many otherwise viable businesses are going to the wall. Bank directors are not paragons of virtue, they are polecats.

For those who choose to ignore how banks are currently making their money, or agree with it, I have no sympathy when their investment turns out to be less lucrative than they hoped.

Answer for 1.

Yorks Post

05 December 2009 By GERRI PEEV WESTMINSTER EDITOR

PRIME Minister Gordon Brown's pledge to clamp down on bonuses for state-dominated banks suffered a setback yesterday when it emerged Lloyds Banking Group will hand out generous perks to staff involved in the takeover of Halifax Bank of Scotland.

Hundreds of executives at the banking giant are set to get up to 80 per cent of their annual salaries in a three-year deal.

The move will anger the 11,000 staff who have been sacked as a result of the merger and independent shareholders whose investments have been hit by the takeover of the beleaguered HBOS, a merger in which Lloyds TSB chief executive Eric Daniels and HBOS chief Andy Hornby were instrumental.

Lloyds Banking Group confirmed the government had approved the bonuses, but stressed that the payments would be made in shares in 2012.

But yesterday RBS – on the brink of a showdown with the government – signalled it would pay only modest bonuses to staff. Insiders said any payouts would be at the "lower end" of the industry standard.

Shadow chancellor George Osborne repeated his call for an end to cash bonuses or bonuses in existing shares, saying: "There are serious questions here about what the government got in return for its money. We were promised there were lending agreements.

They should not be paying out cash bonuses or large bonuses based on existing shares."

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Ah Hornby (corrected)..

Crosby is the other bankster, and the said about the man formerly known as a banker, Goodwin.

The Lloyds merger was an absolute stinker of a decision. The hallmark of the financial crisis being that after years of ignoring the maths and the obvious problems of sustainability and fraud, political expediency and vested interest cooked up schemes that could only be got through in the blink of an eye (panic), proper scrutiny would have stopped them in their tracks.

Former Goldman Sachs directors are running Ocado

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


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