SCANA to pay $137.5M on fraud charges
By Jerry Bellune
The state's largest business failure will cost another $137.5 million.
US Attorney Peter McCoy announced Thursday that SCANA Corp. and its subsidiary SCE&G have agreed to settle a Securities and Exchange Commission lawsuit.
SCANA and 2 of their executives are charged with defrauding investors with false and misleading statements about the $10 billion project that was ultimately abandoned.
The proposed settlement remains subject to court approval.
It requires SCANA to pay a $25 million penalty and $112.5 million in disgorgement plus prejudgment interest.
Disgorement may mean those who commited the fraud may have to give up millions in bonuses the SCANA board awarded them.
How much of that will go to the defrauded investors was not made clear.
Many of them are retired or current SCANA employee, now working for the new owners, Dominion Energy of Richmond, VA.
Many SCANA employees bought stock in their own company as retirement savings, unaware their bosses were defrauding them.
The SEC’s complaint charged SCANA, SCE&G, former SCANA CEO Kevin Marsh and former executive vice president Stephen Byrne with violating the anti-fraud provisions of federal securities law.
The complaint charged SCANA, SCE&G and Marsh with reporting violations.
Since Dominion Energy bought SCANA, it is not clear who pays this settlement.
Will it be Dominion, the 2 executives, someone else or is the responsibility going to be thrust on 750,000+ company ratepayers?
The Chronicle has contacted the SEC for answers.
McCoy said, “Shareholders were deceived by SCANA and robbed of millions upon millions of dollars.
“I am hopeful that, along with the criminal charges brought forward by our office, this multi-million dollar civil fine and penalty shows that no person or organization is above the law.”
The SEC complaint filed in February 2020 alleged that SCANA, SCE&G, and the 2 former executives misled investors.
They claimed the nuclear project would qualify SCANA for more than $1 billion in tax credits.
The SEC claimed the 2 men knew the project was far behind schedule and unlikely to qualify for the tax credits.
The complaint alleged that the false statements and omissions boosted SCANA’s stock price to above $70 a share.
With the help of a state law, they were able to raise $2.2 billion in rates on customers and sell more than $1 billion in bonds.
After 9 SC Public Service Commisson-approved rate hikes, SCANA announced in 2017 it was scrapping the project.
Investors' shares plunged from about $70 to around $40 a share.
The complaint says investors lost hundreds of millions of dollars when the truth came out.
“The securities laws require public companies and their senior executives to speak truthfully 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.”
Marsh and Byrne have pleaded guilty to federal criminal charges and face millions in fines and time in prison.
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.
SCANA also agreed to pay a $25 million penalty.
The litigation against Marsh and Byrne is ongoing.
The case was handled in the District of South Carolina by United States Attorneys Beth Warren and James Leventis.
Justin Jeffries, Graham Loomis, Natalie Brunson, H.B. Robson, and John O’Halloran of the Atlanta Regional Office handled the litigation for the SEC.