Investors claim that Lloyds, its former chairman Sir Victor Blank and former chief executive Eric Daniels, had failed to disclose that the Bank of England had secretly supplied £25bn of emergency funds to keep HBOS afloat, or that the US Federal Reserve had provided a further $11bn.
They argue that as a consequence shareholders did not know HBOS was technically insolvent at the time of the takeover and that they were in the dark about its finances when purchasing American Depositary Receipts in Lloyds.
ADRs are an investment traded on the New York Stock Exchange. They are negotiable securities that represent the underlying securities of a non-US company that trades in the US financial markets.
The takeover of HBOS led to a crash in Lloyds shares. At the time of the takeover they were almost 280p. At the end of last year the share price closed at just under 26p.
Adrian Lithgow, spokesman for the Lloyds Action Now campaign, said the group was hoping to launch a similar action in the UK if it could secure funding.
Lithgow said: “It would be unconscionable if Lloyds were to lose the case and have to pay compensation in the US but not in the UK.
“We also looked long and hard at suing the Treasury but they obtained an indemnity from Lloyds so they cannot be sued for non-disclosure.”
Lord Myners, the former Treasury minister who oversaw the bank bailouts, had called for the Financial Services Authority to publish a report on the downfall of HBOS, whose bad debts since the start of the crisis are expected to top £60bn.
