Lloyds Bank shareholders were "mugged" after the bank "rushed" through the takeover of ailing lender HBOS, the High Court has heard.
A 14-week trial kicked off today, pitting 6,000 shareholders against Lloyds, which are suing the lender for £550m.
Richard Hill QC, representing the shareholders, told the court: “We say shareholders were indeed mugged". He added that investors "should never have been kept in the dark".
The shareholders claim Lloyds failed to disclose the financial distress HBOS was in.
Hill told the court that HBOS had been "haemorrhaging" cash and "facing catastrophe" in late 2008.
He labelled the January 2009 takeover as "rushed" and said documents sent to shareholders about the deal were "highly misleading" adding:
The information that would have disclosed it was a bust failed bank was omitted deliberately. The opposite impression was given. So, although it had reached the same situation as Northern Rock, shareholders were not told that.
Late on Monday, it was reported that the shareholders had approached Lloyds to settle the case for roughly £500m. The lender rebuffed the approach and has said the allegations by the shareholders have "no merit" and will be "defended vigorously".
Former Lloyds execs including the previous chair Sir Victor Blank, ex-chief executive Eric Daniels are former finance director Tim Tookey and previous head of retail Helen Weir are expected to give evidence at the trial that started today.
Lloyds is expected to outline its defence on Thursday.
The case continues.