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HOUSTON -- The Royal Dutch/Shell Group of Companies has agreed to pay $90 million to settle a lawsuit brought by U.S. employees after it revealed it had inflated its oil and natural gas reserve numbers.
On Jan. 9, 2004, when Shell admitted to overstating its reserves by 20 percent, the stock sank. Shell Transport and Trade dropped 7 percent that day. Royal Dutch Petroleum dropped 8 percent.
After several more revisions that year, Shell ultimately admitted to overstating oil and gas reserves by more than 40 percent.
According to a report in the Houston Chronicle, employees enrolled in savings plans governed by the Employee Retirement Income Security Act -- ERISA -- took the hit, losing an estimated $120 million, according to Scott and Scott, the Connecticut law firm representing employees in the class-action suit.
"This really is a great settlement," said David Scott. "Dollar for dollar, this is huge."
Exactly which Shell employees will get paid -- and how much -- remains to be seen.
Potentially, thousands of Shell's 22,000 U.S. workers could receive money. Half of those employees are based in Houston. Final approval of the settlement, which will spell out which employees are eligible for payments, should come in an Aug. 28 hearing in a federal court in New Jersey.
Last month, David Kelly, U.S. Attorney for the Southern District of New York, announced that the federal government would not press criminal charges against Shell. The company has already paid $151 million in fines to the United States and United Kingdom as a result of regulatory investigations into the restatements.
"Shell believes this is a good settlement for plan participants and for the companies," Beat Hess, Shell's legal director, said in a prepared statement. "We are hopeful that the court will approve the settlement, which represents an important step toward putting litigation relating to the reserves recategorizations behind us."