Royal Dutch Shell has agreed to pay $120 million to settle a class action lawsuit led by the Pennsylvania State Employees’ Retirement Board and the Public School Employees’ Retirement Board.
The energy giant had been accused of overstating oil and natural gas reserves and artificially inflating stock prices over a five-year period from April 1999 to March 2004.
Pennsylvania Attorney General Tom Corbett, who announced the settlement, said it covers all investors who purchased Shell shares on US markets over that time, along with any American citizen or entity that purchased Shell shares on non-U.S. markets during that same period.
In 2004, Royal Dutch Shell admitted that it had overstated its oil reserves by about 20 percent, or the equivalent of 3.9 billion barrels. Several executives lost their jobs, including chief financial officer Judy Boynton. In April 2007 Shell agreed to pay $352.6 million, plus administrative costs, to settle a lawsuit with non-U.S. investors who purchased Royal Dutch shares outside the U.S.
“When companies mislead investors and artificially inflate stock values, they put short-term corporate interests ahead of long-term security for investors and consumers,” Corbett said after the latest announcement. “Like most investors, Pennsylvania’s state retirement systems invest in stocks to earn money for future expenses, and they depend on accurate information from the companies they invest in.”
Corbett said the final distribution of funds will be determined by the total number of investors who submit claims. It is expected that the Pennsylvania State Employees’ Retirement Fund and the Public School Employees’ Retirement Fund will recover about $6.5 million as the result of this settlement. The money will be returned directly to the retirement funds.