RBS shareholder group to pursue legal action FUNDING has been secured for a third legal action against Royal Bank of Scotland over its £12 billion rights issue in 2008, with the fight expected to be launched by April. Scotland on Sunday has learned that the RBS Rights Issue Action Group - which represents about 8,000 small shareholders - is preparing to issue proceedings well before June's statutory deadline. One insider revealed that conditional funding for the action has been put in place thanks to a High Court judgement issued last month, which limits private investors" costs in any losing action. The source said: "It is certainly our intention to issue proceedings against RBS. The issue of costs was the major factor that was holding us up. Conditional funding has now been organised. The exposure of our members [to any losing action] would be very limited. It is impossible to be absolutely precise on timing because there is still time- consuming administration to be sorted out when you have over 8,000 members. But April at the latest is the date we have in our minds. Mr Justice Hildyard, at a case management hearing in London on 19 December, said: "It seems to me that the fairest, or least unfair, basis is to adopt the solution of costs proportionate to the subscription paid [for shares in the rights issue] across the board." The controversial RBS rights issue was launched just months after former chief executive Fred Goodwin claimed the bank did not need more money, following its disastrous acquisition of parts of Dutch rival ABN Amro. The RBS Rights Issue Action Group alleges that the Edinburgh-based lender and its senior directors misled investors in the rights issue prospectus as to the bank's financial strength. Later in 2008, the bank collapsed into majority taxpayer ownership with £24bn of losses. RBS says it will vigorously contest that it misled shareholders or acted illegally. Two claims have already been launched against the bank, including a £4bn action by the RBoS Shareholders Action Group. That action is backed by about 100 institutional investors and 12,000 small investors with holdings in the bank above £5,000 following the cash call. The other claim, said to run to hundreds of millions of pounds, is headed by law firm Stewarts Law, representing 20 major shareholders in RBS. Edinburgh-based Standard Life Investments, Legal & General Investment Management, Prudential and the Universities Superannuation Scheme have separately hired corporate litigation firm Quinn Emmanuel to weigh up whether to launch a fourth legal action on the rights issue. It is understood that they have privately decided there is a strong legal case and may also formally launch proceedings shortly. RBS teamed up with Dutch bank Fortis and Spanish lender Santander to break-up ABN Amro in 2007 after Barclays withdrew from a rival bid.