Utility executives overseeing the canceled V.C. Summer nuclear expansion in South Carolina “repeatedly deceived investors, regulators and the public” about the status of the project, resulting in a “historic securities fraud,” the Securities and Exchange Commission charged in a complaint filed Feb. 27 in South Carolina district court.
In its filing, the SEC alleged that two former SCANA Corp. executives—former CEO Kevin Marsh and former EVP Stephen Byrne—“repeatedly deceived investors, regulators, and the public over several years about the status of a $10-billion nuclear energy project. When the truth was revealed, it resulted in hundreds of millions of dollars in losses to SCANA’s investors and to South Carolinians.”
The complaint charges SCANA and South Carolina Electric & Gas—both now part of Dominion Energy—along with executives Marsh and Byrne, with violating antifraud provisions of the federal securities laws, and charges the utilities and Marsh with reporting violations. The SEC is seeking the return of “ill-gotten gains” and other financial penalties from “all defendants.” The SEC is also seeking to bar Marsh and Byrne from becoming corporate officers or directors.
The SEC’s investigation overlapped with hearings held by the South Carolina Public Service Commission in November 2018. There, former SCANA executive and accountant Carlette Walker testified regarding the utility’s mismanagement of the project, once referring to Marsh as a “liar.”
Days after those hearings were held, SCANA Corp. settled a class action lawsuit with the state of South Carolina by agreeing to return roughly $2 billion to ratepayers who had been paying for the unfinished nuclear plant.
In its complaint, the SEC details that in July 2016, SCANA EVP Stephen Byrne advised the utility’s board of directors that: “The percentage of schedule activities completed on time is well below the goal and does not allow for a reliable Integrated Project Schedule.”
Two days later, the SEC continues, on SCANA’s second-quarter earnings call, Byrne made a false statement when he reported that “The guaranteed substantial completion dates remain at August of 2019 for unit 2 and August of 2020 for unit 3. We don’t see anything to change those.”
In a press release announcing the filed complaint, the SEC stated that “the false statements and omissions enabled SCANA to boost its stock price, sell more than $1 billion in bonds, and obtain regulatory approval to raise customers' rates to finance the project.”
A press statement from Dominion Energy called the SEC action "a disappointing development,” and noted that the utility “has been fully cooperating with the SEC in this investigation.”
The utility added: "We believe that our cooperation and extensive remediation efforts to date will be a factor in the resolution of this matter,"