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May 22 (Reuters) - Lloyds Banking Group is joininga class-action lawsuit against government-owned Royal Bank ofScotland, seeking 420 million pounds ($709 million) overthe bank's handling of its 12-billion-pound rights issue, theHerald Scotland newspaper reported.
The Scottish daily said on Wednesday that Lloyds is suingRBS through nine of its pensions and investment managementsubsidiaries along with 40,000 individual and institutionalinvestors already seeking redress from RBS. (http://link.reuters.com/ryh59v)
Hundreds of investors had previously joined an unprecedentedgroup legal action against RBS, alleging they were misled duringan emergency cash call in 2008, and claiming damages of about 4billion pounds ($6.7 billion).
RBoS Action Group, which represents the largest group ofshareholders, last week filed claims and said it would lodgemore this week.
"The management in the relevant insurance businesses gavecareful consideration as to whether it was in the interests ofpolicyholders to join the legal proceedings and decided it wasin their best interests," the Herald Scotland cited a spokesmanfor Lloyds insurance arm, Scottish Widows, as saying.
The newspaper counted Lloyds entities that filed papers tosue RBS earlier this week as Scottish Widows Plc,Scottish Widows Unit Fund Ltd, Pensions Management Ltd, ScottishWidows Unit Trust Managers Ltd, Clerical Medical InvestmentsGroup, Halifax Life, Clerical Medical Management Fund Ltd, HBOSInvestment Fund Managers Ltd and St Andrews Life Assurance.
May 15 marked the six-year anniversary of when the sharesRBS sold in its emergency rights issue began trading and couldbe the cut-off point under British law after which damage claimscan no longer be accepted.
RBS rejects allegations that its former directors misledinvestors or acted illegally.
"These things will be set out in court rather than in anearly settlement, we have a good defence on this," RBS ChiefExecutive Ross McEwan said this month.
($1 = 0.5925 British pounds) (Reporting by Aashika Jain in Bangalore; Editing by Ken Wills)
