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Lloyds TSB, plc LYG Securities Stock Fraud

Company: Lloyds TSB, plc
Ticker Symbol: LYG
Class Period: Oct-1-08 to Feb-27-09
Date Filed: Nov-23-11
Lead Plaintiff Deadline: Jan-22-12
Court: Southern District of New York
New York, NY: A securities class action lawsuit was filed on November 23, 2011 against Lloyds Banking Group, plc (formerly Lloyds TSB, plc) ("Lloyds"); Sir Victor Blank; and Eric Daniels in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased Lloyds American Depositary Receipts ("ADRs") during the period October 1, 2008 through February 27, 2009, inclusive (the "Class Period").

The complaint charges Lloyds and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Lloyds, the largest retail bank in the United Kingdom, has its ordinary shares traded on the London Stock Exchange. Its ordinary shares are also traded in the United States through a sponsored ADR facility with The Bank of New York Mellon serving as the depositary. The ADRs are traded on the New York Stock Exchange under the symbol LYG. The CUSIP number is 539439109 and the ratio of ADRs to ordinary shares is 1:4. Sir Victor Blank was, at all times relevant to the lawsuit, Chairman of Lloyds. Eric Daniels was, at all times relevant to the lawsuit, Chief Executive of Lloyds.

On September 18, 2008, Lloyds announced that it had reached an agreement to acquire the Halifax Bank of Scotland ("HBoS"). Unbeknownst to the public, however, beginning on October 1, 2008, HBoS was insolvent, and received Emergency Liquidity Assistance ("ELA") from the Bank of England. HBoS further received assistance from the United States Federal Reserve Bank ("U.S. Fed. Assistance") beginning on September 16, 2008. Neither the ELA nor the U.S. Fed. Assistance was publicly disclosed. In a report published by the Bank of England in 2010, the Governor of the Bank of England stated "Without that assistance, [HBoS] would not have survived."

On October 13, 2008, Lloyds and HBoS announced revised terms to the acquisition, which terms were reported in a 6-K filed with the SEC. The 6-K failed to disclose that HBoS had received ELA and the U.S. Fed. Assistance.

On November 3, 2008, Lloyds filed with the SEC its shareholder circular recommending the acquisition of HBoS (the "Circular"). The Circular omitted to state or explain in unambiguous language or at all that: (1) HBoS was receiving ELA from the Bank of England in its capacity as lender of last resort and/or that the GBP 60bn near cash assets which HBoS would contribute to the merger had been dissipated or that those assets were not available or acceptable for the granting of other liquidity assistance or existing liquidity assistance from the Bank of England; (2) At the time of publication of the Circular, HBoS had been using the ELA for more than one month, and it was anticipated that it would continue to rely on such a facility at least in the short term; and (3) HBoS was reliant on such ELA to continue trading, and without it HBoS would be insolvent. In addition, the Circular affirmatively stated that there had been no significant change in the financial or trading position of the HBoS since June 30, 2008, the date of its last published financial statements. Furthermore, the Circular states that, as to HBoS, all material contracts, or contracts which might be material, had been disclosed.

On November 19, 2008, the acquisition was approved by the Lloyds shareholders. A similar vote of HBoS shareholders on December 12, 2008 resulted in approval of the takeover.

On or about November 24, 2009, the Bank of England revealed the ELA that it had extended to HBoS. Although the existence of the ELA, and the state of Lloyds' knowledge of it, was not disclosed until November 24, 2009, the market did begin to understand the true nature of HBoS's finances shortly after the merger was consummated.

On February 13, 2009, Lloyds reported that the newly-acquired HBoS had suffered a worse-than-expected GBP 10 billion loss in 2008, causing the price of Lloyds ADRs to plummet from a closing price on 2/12/09 of $5.33 to $3.80 on 2/13/09 and $2.99 on 2/17/09, a total decline of 44 percent. Then, on February 27, 2009, Lloyds confirmed that HBoS sustained a pre-tax loss of GBP 10.8 billion in 2008, and that it had been plagued by GBP 9.9 billion of bad loans. This announcement caused the price of Lloyds ADRs to decline from a close on 2/26/09 of $4.01 to $3.25 on 2/27/09, $2.79 on 3/2/09, $2.51 on 3/3/09, $2.68 on 3/4/09 and $2.22 on 3/5/09, a total decline of 44 percent. In total, the news released from February 13 to February 27 resulted in a decline in the price of Lloyd's ADRs from $5.33 to $2.22, a decline of 58 percent.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

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Published on Dec-8-11


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