The Boston Globe: SEC opens formal probe of Shell's oil reserves
By Associated Press, 2/20/2004
LONDON -- Royal Dutch/Shell Group of Cos. faced a fresh setback yesterday in its campaign to win back the confidence of investors after US regulators launched a formal probe into the company's overstatement of its oil and gas reserves.
The US Securities and Exchange Commission had been making an informal inquiry into Shell's surprise remarks on Jan. 9 that it was downgrading 20 percent of its proved reserves and reclassifying them into less certain, unproved categories. The SEC has now decided to hold a formal investigation, both Shell and the SEC said.
Shell's revelation last month about its reserves worried shareholders and led some to call for the resignation of the company's chairman, Sir Philip Watts.
Shell spokesman Andy Corrigan said he believed the SEC's decision to intensify its inquiry was "fairly standard" and emphasized it was not a criminal investigation. Shell would continue to cooperate fully with the SEC, he said.
An SEC official in Washington said a formal investigation means regulators have reason to believe laws may have been violated but added that the SEC has yet to reach any conclusions. The official spoke on condition of anonymity.
A formal probe gives the SEC legal powers to subpoena documents and testimony. The SEC has the power to investigate Shell, which is headquartered in London, because the company's shares are traded in the United States, on the New York Stock Exchange.
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