The Daily Telegraph: US class action cites Shell chief
By Christopher Hope, Business Correspondent
Shell's problems mounted yesterday after an American law firm launched a legal action against the Anglo-Dutch oil and gas company on behalf of investors.
The New York-based law firm Milberg Weiss Bershad Hynes & Lerach said the suit was prompted by Shell's "shocking and unprecedented" admission earlier this month that it had overstated its proven reserves by 20pc.
The law firm said this meant that Shell's "true value in the market place was severely overstated and misunderstood".
The action cites both the English and Dutch arms of the company as defendants, as well as nine past and present directors. These include Sir Philip Watts, chairman of the committee of managing directors, Sir Mark Moody Stuart, his predecessor, and Judy Boynton, finance director.
The action is open to any investor, including European shareholders, who bought shares in Shell between December 3, 1999, and January 9, 2004. The law firm will then appoint one of the investors as lead plaintiff.
Milberg Weiss, a 190-lawyer firm with offices in New York, San Francisco and Los Angeles, among others, says it has won $20billion for investors through class action suits. Steven Schulman, a partner, said: "We anticipate it will generate a lot of interest both here and abroad. We are highly optimistic based on the facts that we already know."
A Shell spokesman said: "We are aware of the press release but not aware that we have been served with proceedings." The company added: "The reserves were stated in good faith at the time and there was no wrongdoing on the part of the individuals involved."
Investors were lukewarm about the action. One said: "This happens all the time in America. Whether it is valid or not I don't know."
Tony Alves, an analyst at Investec, said he thought it would be hard to prove guilt, despite the damage done to Shell by the downgrade. "I can't see it anything other than leaving Shell with some unfortunate PR," he said.
Shell shares, which have fallen from around 416p at the beginning of the month, fell 2.25 to 359.5p yesterday.
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