RBC clients file lawsuit

| 2 June 2008 06:00

Royal Bank of Canada joins the list of financial institutions sued by clients over the large losses associated with the credit crisis.

The Globe & Mail reports:

Royal Bank of Canada has been hit with a proposed class action lawsuit in New York alleging that it told clients that auction rate securities were safe short-term investments for anyone with at least $25,000 in available cash.

The auction rate market froze earlier in the year and issuance has since plummeted. (On a side note, Warren Buffett has confirmed he has used this market dislocation for a little cherry picking.)

Going forward, expect to see a lot of lawsuits a la 1990s Orange County – Robert Citron. It’s just getting started.

Update: Since I wrote this there have indeed been lots of lawsuits, particularly in the auction rate security area. See my label ‘Lawsuits‘ for more on those posts since.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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