SCANA agrees to settlement on fraud charges in failed nuclear power plant expansion
CHARLESTON, S.C. (WCSC) - SCANA Corporation and its subsidiary, SCE&G, agreed to settle a lawsuit alleging they defrauded investors about a nuclear plant expansion that was ultimately abandoned, the U.S. Attorney for South Carolina announced Thursday.
United States Attorney Peter M. McCoy, Jr. said the decision will settle Securities and Exchange Commission’s lawsuit which accused them of making false and misleading statements about the nuclear plant expansion. The proposed settlement, which remains subject to court approval, would require SCANA to pay a $25 million penalty and require SCANA and SCE&G to pay $112.5 million in disgorgement plus prejudgment interest, according to a release from McCoy’s office.
“Shareholders were deceived by SCANA and robbed of millions upon millions of dollars,” McCoy said. “I am hopeful that, along with the criminal charges brought forward by our office, this multimillion dollar civil fine and penalty shows that no person or organization is above the law.”
The SEC’s complaint filed in February 2020 alleged that SCANA, SCE&G, and two former senior executives misled investors by claiming that a project to build two nuclear units would qualify the company for more than $1 billion in tax credits when they knew the project was far behind schedule and therefore unlikely to qualify for the tax credits. The complaint alleged that the false statements and omissions boosted SCANA’s stock price and enabled it to raise rates on customers and sell more than $1 billion in bonds. In mid-2017, SCANA announced it was scrapping the project and, according to the complaint, investors lost hundreds of millions of dollars when the truth was revealed.
“The securities laws require public companies and their senior executives to speak truthfully in their statements to investors,” SEC Atlanta Regional Office Associate Director Justin Jeffries said. “This settlement holds SCANA and SCE&G accountable for their alleged fraud and reinforces that companies must not deceive investors.”
The SEC’s complaint, filed in federal court in South Carolina, charged SCANA, SCE&G, SCANA’s former CEO Kevin Marsh and former executive vice president Stephen Byrne with violations of the antifraud provisions of the federal securities laws. The complaint charged SCANA, SCE&G and Marsh with reporting violations.
Without admitting or denying the allegations, SCANA and SCE&G agreed to a permanent injunction and to pay $112.5 million in disgorgement plus prejudgment interest, which will be deemed satisfied by SCANA and SCE&G’s settlement payments and related rate payer and shareholder litigation. SCANA also agreed to pay a $25 million penalty.
The litigation against Marsh and Byrne is still ongoing.
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