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UK and US regulators team up and levy £83m in penalties

Financial Times: UK and US regulators team up and levy £83m in penalties

“more robust policing since the Enron scandal broke in 2001.”

By Andrew Parker in London and Adrian Michaels in New York

Jul 30, 2004

The fines meted out to Royal Dutch/Shell yesterday by the authorities on both sides of the Atlantic are indicative of regulators’ more robust policing since the Enron scandal broke in 2001.

The Financial Services Authority, the chief UK financial regulator, delivered its biggest fine by finalising a £17m penalty with Shell. But the FSA fine is dwarfed by the $120m (£66m) penalty that Shell has agreed with the Securities and Exchange Commission, the main US regulator.

Shell’s settlement with the SEC still needs approval by the regulator’s five commissioners, which is expected in the next two to three weeks. The proposed settlement followed unprecedented collaboration between the enforcement arms of the SEC and the FSA. It also underlined how the SEC has been extending its international reach in the past few months as it pursued corporate wrong-doing at all companies with US share listings.

Shell said it would pay the £17m penalty without admitting or denying the FSA’s findings that the company breached UK rules on market abuse and listings.

The FSA declined to comment further about its findings until publication of an enforcement notice, which is expected shortly.

Shell said it would pay the $120m penalty without admitting or denying the SEC’s conclusions that it violated US securities laws and SEC rules. The SEC’s settlements with companies have risen steeply in response to the public outcry at corporate wrong-doing.

John Tiner, FSA chief executive, said it was wrong to make comparisons between the penalties and denied that the UK regulator had been weak. “We are being anything but weak. If you ask the Shell board if we have been weak, they may think not.”

Mr Tiner highlighted how the fines were used for different purposes. The US penalty on Shell will mostly be earmarked for a compensation fund for investors, while the UK fine will form part of a fees rebate for listed companies and regulated financial firms. He also defended the FSA following accusations that its Shell investigation had been slow off the mark compared to the SEC’s.

He said the FSA had launched inquiries into Shell well before disclosing on April 23 that its enforcement division was probing the company. Mr Tiner said the FSA had no plans to replicate the SEC rules that require oil and gas companies to make disclosures about their reserves.

© Copyright The Financial Times Ltd

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