On Wednesday a London court ruled that an action group firm that was established to sue the Royal Bank of Scotland (RBS) over its 2008 rights issue must be required to hand over around 19,000 documents that are linked to the litigation.
The RBoS Shareholders Action Group company (AGC) that was established by shareholders of the RBS who successfully sued the bank for approximately £200 million last year over accusations that the bank misled them when they subscribed to its 2008 rights issue.
The court heard how the settlement process had been delayed because of documents, including emails, that were being held back by the AGC and Gerard Walsh, a businessman who was identified as the “driving force” behind the group.
Manx Capital Partners, the new agent for the claimants, is represented by Signature Litigation. It won a court order last Wednesday that will require Walsh to hand over 19, 284 documents that its lawyers said were necessary to determine how the settlement will be paid out, including data on “various claims by third parties in respect of settlement monies.”.
The court heard how Walsh had declined to hand over more than 15,000 documents that Manx said were important to the action group. He will now be compelled to submit them to Manx.
Manx had alleged Walsh of not complying with the order to disclose the documents that was set by the High Court last April.
Barra McGrory QC, Walsh’s lawyer, informed the court that the order had been “honoured” and that the process of disclosure that was proposed by Signature, which has legally represented the claimants of RBS throughout the proceedings, gave Walsh the right to use his own judgment if the documents were relevant, irrelevant or legally privileged.
He stated: “But that appears not to be to the satisfaction of Manx or its representatives, which has made it very clear it does not trust Mr Walsh to make that decision unsupervised and entirely on this own.”
He disclosed that there was a “very large category” of emails that were considered by Walsh to be private and had nothing to do with the business of the AGC.
A lawyer for Manx, Ian Higgins, informed the court that Walsh was hesitant to hand over the documents due to the “deteriorating” relationship with Signature, which he claimed had “broken down long before” the April order.
He said that the law firm had some evidence that Walsh “masqueraded as people that don’t exist” to communicate with the claimants.
The court heard how Signature had also discovered 90 million “phantom” shares of the RBS that “ended up on the claims register, and there is a dispute as to how that happened”.
He stated: “It can’t possibly have been thought by someone doing a good faith review that emails about exactly that topic were not agency documents.”
Walsh is scheduled to appear for a cross-examination in January.