Williams sponsor RBS targeted by class action suit

A New York law firm announced Saturday it had filed a class action complaint in US court against the Royal Bank of Scotland (RBS) for allegedly issuing false statements that exposed shareholders to risky subprime loans.

The law firm Murray, Frank & Sailer said it was acting on behalf of shareholders over two separate public offerings made in May 2006 and September 2007.

The shares closed at 5.00 and 5.70 dollars Friday, a fraction of their original offering price of 25 dollars.

The lawyers said RBS "failed to disclose risks that RBS's exposure to the subprime mortgage market was understated," that "RBS would be forced to take write-downs" that "would substantially decrease RBS's capital levels," which "would force RBS to accept a bailout by the British government."

RBS is now 70 percent owned by the British government. The bank has forecast it would make a British corporate record annual loss of up to 28 billion pounds (41 billion dollars).