By Laurel Brubaker Calkins and Margaret Cronin Fisk
The New York and Ohio state pension funds will be the lead plaintiffs in shareholder litigation against BP Plc and company directors and managers over investment losses suffered in the wake of the Gulf oil spill.
U.S. District Judge Keith P. Ellison in Houston named New York State Comptroller Thomas DiNapoli and Ohio State Attorney General Richard Cordray, who head their states’ public employee pension funds, as lead plaintiffs for investors who bought either BP common stock or American depositary receipts from June 2005 to June 2010.
Ellison also named four individual investors as lead plaintiffs for a smaller class of investors who bought common shares of London-based BP or ADRs from March 2009 to April 20 of this year, the date the Deepwater Horizon rig exploded, sparking the worst offshore oil spill in U.S. history.
While the sub-class of investors claim that BP’s leadership made misleading statements about drilling safety in the Gulf of Mexico in the months before the rig explosion, the state pension funds “argue more generally that BP made fraudulent statements between 2005 and 2010 about its safety precautions in the Gulf of Mexico and elsewhere,’’ Ellison said in yesterday’s order.
The New York and Ohio funds also claim substantial losses from BP ADRs purchased several weeks after the Deepwater Horizon explosion, a timeframe not covered by the complaint of the smaller group of investors, Ellison said. For six weeks after the blast, the funds claim “BP intentionally understated the oil flow rate in an attempt’’ to diminish harm to the company, lawyers for one of the institutional funds said in court papers.
April 20 Explosion
BP fell about 40 percent in the weeks after the Deepwater Horizon drilling rig exploded while drilling a BP well off the Louisiana coast on April 20, investors said in an Oct. 13 court filing. The drop eliminated billions of dollars in the company’s total market capitalization, shareholders’ lawyers claimed.
BP ADRs, which each equal 6 ordinary shares, closed yesterday at $44.11, up from a low of $27.02 on June 25.
Ellison named Cohen Milstein Sellers & Toll PLLC of New York, Berman DeValerio of Boston, and Yetter Coleman LLP of Houston as co-lead counsel for the larger investor securities fraud class.
The judge named Cotchett, Pitre & McCarthy of Burlingame, California, and the Mithoff Law Firm of Houston as co-lead counsel for the smaller sub-class of investors who bought shortly before the spill.
Ohio Attorney General Cordray, who was defeated in November, will be replaced by Mike DeWine, who takes office in January.
Securities fraud actions by BP shareholders are one of three categories of BP investor claims that have been consolidated for joint pretrial handling in Ellison’s court.
Ellison also presides over lawsuits filed by BP employees claiming losses from mismanagement of their company pension funds, as well as lawsuits brought by investors who are suing BP’s board and management on behalf of the company.
Shareholders in all three categories filed suits in multiple states before the federal panel on multidistrict litigation transferred the cases to Ellison in August. So-called MDL proceedings are designed to save time and money, and to prevent conflicting rulings by different judges presiding over similar cases.
(AP file photo/Alastair Grant)