AMSTERDAM, May 29 /PRNewswire/ --
- Binding declaration covers largest securities fraud settlement on record in Europe - Shell to pay foundation representing 150+ institutional investors in nineteen countries stemming from company's prior misstatements of proven oil gas reserves; US law firm Grant Eisenhofer represents international investor group
Officially approving the largest securities fraud settlement ever reached in Europe, a Dutch appeals court has ordered Royal Dutch Shell plc. to begin payment of US$381 million plus interest to a foundation representing a group of institutional investors from 17 European countries, plus Canada and Australia.
The binding declaration was issued by the Amsterdam Court of Appeals, which in April 2007 agreed to serve as a forum for the investor group and Shell to work together in reaching a settlement of securities fraud claims stemming from the oil giant's inflation of its proven oil and gas reserves during the years 1997-2003.
The agreement - which has grown to include more than 150 public pension funds in Europe, North American and Australia - is a particular milestone for European investors, given that European courts lack a class action mechanism for pursuing securities fraud claims. Under a relatively new statute never previously applied to a securities case, Dutch law allowed the Amsterdam appellate court to accept a collective resolution as long as both sides agreed, even in absence of a civil lawsuit.
The US$381 million settlement covers all non-U.S. purchasers of Shell Stock obtained on European securities exchanges - principally London and Amsterdam - during the period of Shell's allegedly illegal energy reserve accounting. The pension funds leading the settlement represent millions of public and trade-based employees across Western Europe, including: The Netherlands, United Kingdom, Scotland, Ireland; Germany, Sweden, Luxembourg, France, Denmark, Austria, Belgium, Finland, Italy, Liechtenstein, Spain, Switzerland and Norway.
Under the settlement, Shell is making its payment to a foundation specifically created to petition the Court of Appeals on behalf of the investor group. Leading U.S. securities and corporate governance law firm Grant Eisenhofer represents both the special purpose foundation and the pension funds, which held in excess of one billion shares of Shell during the years the company exaggerated its reserves.
As a result of the extended inflation of its energy reserves, Shell was forced to issue multiple large financial restatements beginning in 2004. Estimates are that over the six-year period covered by the case, Shell overstated more than US$100 billion of future cash flows, based on billions of barrels of oil that were not actually held in its reserves.
We are pleased that the Amsterdam Court of Appeals has issued its final approval on this historic settlement, which represents a watershed outcome for European and other non-US investors in gaining substantial, collective recovery in one of the most high-profile securities cases in recent years, said Jay Eisenhofer, co-managing partner of Grant Eisenhofer.
It is important that investors have a proper mechanism and forum for pursuing securities claims in European courts - the Amsterdam Court of Appeals has done a tremendous service for advancing shareholder rights in its handling of the Shell case, he added. This was a uniquely European resolution in the context of a securities fraud, but one that can present huge implications in other disputes going forward.
Note: Grant Eisenhofer P.A. represents institutional investors and shareholders internationally in securities class actions, corporate governance actions and derivative litigation. The firm has recovered more than US$12 billion for investors in the last five years. GE has also been selected among The National Law Journal's Plaintiffs' Hot List for the past four years, and is a member of its Hall of Fame. Risk Metrics named Grant Eisenhofer the Number 1 law firm in average shareholder recoveries in securities class actions in 2007 and 2008. For more information, visit www.gelaw.com