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Two British local authorities set to sue Royal Bank of Scotland

We are moving headlong towards one of the most bizarre situations seen in legal history with two local authority pension schemes set to sue the Royal Bank of Scotland for "withholding information about the state of the company". As we have covered on a number of occasions in the past, there have been murmurings from shareholders regarding the massive rights issue last year with allegations that the true extent of the companies fall was not fully disclosed at the time of the issue.

While this would seem like a fairly normal court case with both sides giving their opinions, we are in fact seen taxpayer suing taxpayer with the two local authority pension schemes held on the half of employees of the authorities and the Royal Bank of Scotland majority owned by UK taxpayers. If for example a compensation payment of £10 million was agreed we would have the bizarre situation of taxpayer effectively being paid by taxpayer. There will only be one winner in a case which could go on for some time and is highly complex, i.e. the legal profession.

Many will be watching the Royal Bank of Scotland case as this could have serious implications for UK taxpayers with substantial compensation payments possible. However, there is speculation that the vast majority of potential compensation payments may well be covered by financial insurance offered by AIG - another of the fallen giants.

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