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US Class Action Lawsuit Against Shell Given go-ahead by U.S. District Chief Judge John Bissell US Class Action Lawsuit Against Shell Given go-ahead by U.S. District Chief Judge John Bissell

Wednesday 10 August 2005

A securities fraud case against the world’s third-largest oil company, Royal Dutch/Shell Group, has been given permission to proceed by U.S. District Chief Judge John Bissell.

The case stems from a sharp drop in Shell’s stock in 2004, after Shell announced it had overstated its oil reserves, a key measure of an oil company’s wealth and future strength. The securities case was filed in New Jersey because the company has several gasoline distribution terminals in the state. Attorneys for investors who lost millions called the hearing a “monster” in terms of its potential effect.

It isn’t clear how many people were affected by the alleged fraud. However the case is regarded as one of the most significant securities fraud actions because of the size of the multinational and the length of the class period, which is roughly five years. It is being closely watched by regulators and lawyers from around the world.

There was activity in the United States to perpetuate… fraud,” said Stanley Bernstein, the lead attorney. Mr Bernstein cited meetings in Houston about calculating the company’s reserves in Nigeria and Angola. Shell’s group reserves auditor came from Europe to attend at least one of those meetings, he added. And the oil company had a New York office for investor relations. “This was a central location. … The fraud does not have to be masterminded in the United States,” Bernstein said.

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The 152 page Order by Chief Judge John W Bissell

The above article contains extracts from Newark Star-Ledger article published on 14 July 2005.

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