RBS moves to stymie legal battle in Texas

By Martin Flanagan
Published on Sunday 22 January 2012 00:00

A LONG-running legal battle resumes tomorrow at the High Court in London between Royal Bank of Scotland and US hedge fund Highland Capital over a called‑in loan.

The bank is applying for an injunction to prevent the hedge fund from launching a $100 million (£66m) lawsuit alleging fraud and unjust enrichment in the state of Texas, claiming British jurisdiction should apply.

It follows an earlier judgment in RBS’s favour at the High Court in December 2010 relating to a collateralised debt obligation (CDO) issued by Highland and funded by the Scottish bank in 2008.

The CDO – a bond backed by pools of securitised loans – failed to close after the financial markets froze at the height of the sector crisis, and the Royal called its own financing in.

Although Justice Burton found in favour of RBS at the earlier hearing, he was highly critical of its behaviour. He accused RBS of a “deception” of Highland that allowed the bank to take advantage of accounting rules when calling in Highland’s loans backing the CDO as collateral for the Royal’s own loan. The judge said RBS had then been “disinguenuous” by holding a “sham” auction of the loans when in reality it expected to keep some of them on its own books.

Justice Burton also said that some comments made under oath by Sam Griffiths, an RBS managing director and head of European high-yield trading, were “wholly incorrect” and “untrue”.

Highland was ordered to pay just £18 million – about half the amount sought – and costs were not awarded in the bank’s favour. RBS said at the time that it expected all employees to adhere to the highest standards of integrity. Griffiths is still employed at the group.

Both sides had appealed against the judge’s earlier ruling. The latest hearing is expected to last about seven days.

In a further twist, RBS replaced its litigation team in the tussle late last year, its traditional counsel Linklaters replacing rival City firm Herbert Smith.

Highland is being represented at the hearing by lawyers Cooke Young & Keidan.

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Barney Thomson

Sunday, January 22, 2012 at 06:13 PM

Why is this "Scottish" bank pursuing its court case through a London court? If it is Scottish, should it not use Scots Law? It makes me think that it may not be really Scottish after all.

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The Answer

Sunday, January 22, 2012 at 06:42 AM

Writing in The Scotsman, the SNP depute leader said: ........................ Next week, the Royal Bank of Scotland will open its new global headquarters in Edinburgh. RBS is the jewel in the crown of Scottish industry, a beacon of success in an economy that is too often noted for its underperformance. ..................................................... But it could all have been very different. ................................ http://www.snp.org/media-centre/news/2005/sep/sturgeon-fuels-fire-over-scottishpower

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Willie Boy

Sunday, January 22, 2012 at 02:53 AM

If they could get Goodwin to fly into the States I am sure he would be arrested the minute his feet touched the ground, No wonder he resides in a security laden fortress. But, his time will come, and it will not be of his choosing.

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Scotland the Dave

Sunday, January 22, 2012 at 01:02 AM

We are all victims of the snowflake on Fred's Bridge at Gogar. The irony is that the site was once home to an institution for people considered by their society to be insane lunatics. -------------------------------------------------------------------------------------------- Dr Brian Cox has done much to teach us and encourage our interest in physics. -------------------------------------------------------------------------------------------- Likewise Eric Idle -------------------------------------------------------------------------------------------- Just remember that you're standing on a planet that's evolving And revolving at nine hundred miles an hour That's orbiting at nineteen miles a second, so it's reckoned A sun that is the source of all our power The sun and you and me and all the stars that we can see Are moving at a million miles a day In an outer spiral arm, at forty thousand miles an hour Of the galaxy we call the 'milky way' Our galaxy itself contains a hundred billion stars It's a hundred thousand light years side to side It bulges in the middle, sixteen thousand light years thick But out by us, it's just three thousand light years wide We're thirty thousand light years from galactic central point We go 'round every two hundred million years And our galaxy is only one of millions of billions In this amazing and expanding universe The universe itself keeps on expanding and expanding In all of the directions it can whizz As fast as it can go, the speed of light, you know Twelve million miles a minute and that's the fastest speed there is So remember, when you're feeling very small and insecure How amazingly unlikely is your birth And pray that there's intelligent life somewhere up in space

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I couldn't possibly comment

Sunday, January 22, 2012 at 12:49 AM

some might think that the Senior Management and Board of a company that proposed a Rights Issue based on a blatantly dishonest share valuation should be prosecuted as individuals, jointly and severally, for their part in the corporate deception.

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Colin RB

Sunday, January 22, 2012 at 12:17 AM

well if RBS evidence in the Carlyle case , rights issue prospectus and accounts going concern statements in accounts is anything to go with then I know who i believe- taxpayers money spent by RBS on legal fees dwarfs bonuses and is the real scandal of RBS incompetence Mind you Lloyds HBOS are worse- no wonder their top corporate people are going to Santander

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