CORPORATE CRIME REPORTER
Shell
to Pay $352.6 Million to Settle First Europe-Wide Class Action
21 Corporate Crime Reporter 16, April 11, 2007
Royal Dutch Shell will pay a group of more than 50 European institutional investors
$352.6 million to settle claims alleging improper reporting of its proven oil
and gas reserves.
The settlement covers all non-U.S. purchasers of Shell stock made on European securities exchanges during the period of the improper reserve accounting.
The settlement stems from Shell’s inflation of its proven oil and gas reserves from 1997-2003, which led to massive financial restatements by the company beginning in 2004.
Estimates are that over a six-year period, Shell allegedly overstated more than $100 billion of future cash flows, based on billions of barrels of oil that were not actually held in its reserves.
Under
the terms of the settlement, Shell has agreed to make a cash payment to European
shareholders of $352.6 million.
“This is truly an unprecedented settlement of a large-scale European shareholder dispute,” said Jay Eisenhofer, an attorney representing the investment groups. “The scale of recovery and the sheer collective unity of the investor group are both unique in a European context.”
“European
investors do not have the same options to pursue securities claims that are
available to U.S. investors through class actions,” Eisenhofer said. “By
coming together in such a large fashion across multiple countries, and petitioning
the Amsterdam Court of Appeals to work directly with Shell to settle their claims,
this group of trans-European investors has struck a uniquely European resolution
to settling a European securities claim – it truly has never been done
before.”
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