American shareholders have filed suit against the Lloyds Banking Group of Britain and former bank executives, alleging they were misled by the Defendants over the government’s rescue of HBOS in the depths of the financial crisis in 2008. The bank, along with Victor Blank, who stepped down as chairman of Lloyds, and Eric Daniels, the former chief executive, were named as Defendants in the class-action lawsuit filed in New York. It’s alleged that the Defendants had a “reckless disregard for the truth.”
The bank’s board is accused of making misleading statements about the government-engineered takeover of HBOS, which at the time was called by Mr. Daniels a “fantastic opportunity to create the U.K.’s leading financial services group and create great value for both sets of shareholders.” But weeks later, Lloyds had to turn to the government for a bailout, surrendering a 43% stake in return for a £17 billion ($26.4 billion) injection of taxpayers’ money. Shareholders claim they were not told about a deterioration in HBOS’s finances, and the extent of the problem became known only when the bank posted a worse-than-expected £10 billion loss in February 2009.
Source: New York Times
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