The Securities and Exchange Commission announced that SCANA Corp. and its subsidiary South Carolina Electric & Gas Co. (SCE&G) have agreed to settle the SEC’s lawsuit charging them with defrauding investors by making false and misleading statements about a nuclear power plant expansion that was ultimately abandoned.
The proposed settlement, which remains subject to court approval, would require SCANA to pay a $25 million penalty, and SCANA and SCE&G to pay $112.5 million in disgorgement plus prejudgment interest.
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,” said Justin Jeffries, Associate Director of the SEC’s Atlanta Regional Office. “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 in related rate payer and shareholder litigation. SCANA also agreed to pay a $25 million penalty. The litigation against Marsh and Byrne is still ongoing.
The SEC’s litigation was handled by Justin Jeffries, Graham Loomis, Natalie Brunson, H.B. Roback, and John O’Halloran of the Atlanta Regional Office.