finalized a settlement of a trans-Atlantic enforcement action over oil-reserves accounting.
The company agreed to pay some $150 million in penalties and other fees to settle the case, which stemmed from the overstatement of 4.47 billion barrels of previously reported energy reserves.
The settlement came after an investigation by the
Securities and Exchange Commission
, the U.K. Financial Services Authority and the Autoriteit Financiele Markten, the primary financial market regulator in the Netherlands. The company
agreed last month to settle the case.
Shell stunned shareholders in January when it slashed its proved reserves by 20%, sending its shares tumbling. Three other downgrades followed, for a total reduction in reserves of 23% from previously reported levels. In the confusion surrounding the downgrades, Shell dismissed several top executives and delayed by two months the release of its annual report.
The SEC said Tuesday that Shell agreed to settle by consenting to a cease-and-desist order finding violations of the antifraud and other provisions of the federal securities laws, and by paying $1 disgorgement and a $120 million penalty. Shell also spent an added $5 million to develop and implement a comprehensive internal compliance program. The company settled without admitting or denying the commission's substantive findings.
Shell simultaneously agreed to pay 17 million pounds to settle a market abuse enforcement action initiated by the FSA.
"Shell has worked hard over the past months to improve its systems and controls and implement other remedial measures to prevent any recurrence of these unfortunate events," Chairman Jeroen van der Veer said. "Shell has taken these matters seriously and has cooperated fully with the regulatory authorities. The conclusion of the FSA's and SEC's investigations into Shell represents another significant step for Shell in putting the reserves issues behind us and continuing our efforts to regain and maintain the confidence and trust of our investors, partners, customers and employees."
According to the SEC, Shell overstated proved reserves by 23%. The company also overstated future cash flows in the filing by $6.6 billion. Shell corrected these overstatements in an amended filing on July 2, which reflected the degree of Shell's overstatements for the years 1997 to 2002.
"The degree of international and interagency cooperation in this case has been extraordinary and sets an important precedent for investors that regulatory efforts to police the financial markets will transcend national borders," said SEC enforcement director Stephen Cutler.
On Tuesday, Shell fell 86 cents to $42.85 and
( RD) dropped 67 cents to $49.57.