Jan 29 A group of shareholders suing Weatherford International Ltd for alleged securities law violations have notified a United States federal court that they have agreed on preliminary settlement terms with the oil services firm.
Weatherford has agreed to pay $52.5 million to the American Federation of Musicians and Employers' Pension Fund (AFME), the Georgia Firefighters' Pension fund and other shareholders to settle the case after three years of litigation, according to a Wednesday filing in the U.S. District Court for the Southern District of New York.
The case began when Weatherford announced in March 2011 that a "weakness in internal control" had caused the company to understate its tax expenses from 2007 to 2010 by more than $500 million.
AFME, one of the largest pension funds in the entertainment industry, filed a lawsuit against Weatherford and its directors, alleging that the omission was a knowingly false statement prohibited by the Securities and Exchange Act.
The pension fund alleged that through "a simple and crude tax accounting fraud", Weatherford's tax expenses dropped sharply in 2007, leading to improved analyst assessments.
A Weatherford representative was not immediately available to comment on the terms of the proposed settlement, which will need the approval of a federal judge.
The securities settlement follows the November announcement that Weatherford would pay $253 million in fines to the U.S. government to settle unrelated allegations that it had violated the Foreign Corrupt Practices Act (FCPA) and export laws.
The U.S. government had charged Weatherford with exporting oil and gas equipment to Iran, Syria, Sudan and Cuba in violation of sanctions, and exporting items controlled for nuclear non-proliferation reasons to Venezuela and Mexico.