24 August 2004
Posted 25 August 04
The FSA has today fined the Shell Transport and Trading Company ("STT"), Royal Dutch Petroleum Company ("RDP") and the Royal Dutch/Shell Group of Companies ("Shell") £17 million for committing market abuse and breaching the listing rules.
This fine was imposed on Shell as a result of unprecedented misconduct in relation to misstatements of its proved reserves. When Shell first publicly revealed on 9 January 2004 that it had misstated its reserves, STT's share price fell from 401p to 371p (7.5%) reducing its market capitalisation on that day by approximately £2.9 billion.
A number of factors made Shell's abuse of the market particularly serious:
Andrew Procter, Director of Enforcement at the FSA, said:
The FSA views timely and accurate disclosure to shareholders and markets as fundamental to maintaining the integrity of the UK's financial markets. The size of the penalty in this case reflects the seriousness of Shell's misconduct and the impact it had on markets and shareholders.
"The swift resolution of this case was made possible by the excellent co-operation the FSA has enjoyed with the Securities and Exchange Commission.
Shell has co-operated fully with the FSA's investigation and this is reflected in the size of the penalty which would have been significantly higher were it not for the company's efforts.
Although the FSA's investigation into the Shell's misconduct is now closed, investigations into other aspects of this matter are ongoing.
The proceedings in this case relate to the second category of behaviour misleading statements and impressions which involves making improper use of information that other investors would regard as significant in advance of that information being announced to the market as a whole. The provision protects investment markets, such as the equity markets, that rely on the timely provision of information to all market participants on an equal basis.
Where a listed company's misconduct is particularly serious the FSA will take action under the market abuse regime as well as the Listing Rules.
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