BP asks judge to deny investors’ bid to sue as group

BP Plc asked a federal judge to deny U.S. investors the right to pursue a class action, or group, lawsuit claiming the company misled them before and after the 2010 Gulf of Mexico oil spill.

The investors, led by the New York and Ohio pension funds, sued BP and certain officers in 2010, alleging violations of U.S. securities laws.

The investors claim the company lied about the size of the worst offshore spill in U.S. history and its ability to contain a deep-water blowout to prop up its share price. Shareholders also claim BP’s senior management publicly proclaimed a commitment to safety improvement while internally cutting budgets and rejecting employees’ concerns about safety.

“Plaintiffs must demonstrate that the alleged misrepresentations were publicly known, that the stock traded in an efficient market, and that the relevant transaction took place between the time the misrepresentations were made and the time the truth was revealed,” BP’s lawyers said yesterday in a filing in federal court in Houston.

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BP has denied fraud or any lack of attention to safety in court filings. “A commitment to safety is not a guarantee that no future accidents will occur,” the company said in an earlier court filing.

Richard Mithoff, a lawyer for the plaintiffs, didn’t immediately respond to an e-mail seeking comment on the filing.

Two Groups

The investors asked U.S. District Judge Keith P. Ellison of Houston in June to let them sue in two groups. The larger group, comprised primarily of institutional investors, includes all buyers of BP’s American depositary receipts from Nov. 8, 2007, to May 28, 2010. A subgroup, claiming to represent about 900,000 individual investors, bought BP ADRs from March 4, 2009, to April 20, 2010, the date BP’s Macondo well blew out off the Louisiana coast.

BP shares fell about 40 percent in the weeks after the explosion, according to court filings. The drop eliminated billions of dollars in the London-based company’s market value, which hasn’t fully recovered.

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The investors also sued BP’s former Chief Executive Officer Tony Hayward and Doug Suttles, ex-chief operating officer of BP’s exploration unit, over statements the men made in connection with the spill.

Hayward allegedly misled investors about how thoroughly BP had improved its safety practices and was prepared to handle a large spill in ultra-deep water, according to the shareholders’ complaint.

Rig Disaster

Investor securities-fraud suits were among hundreds of claims filed in U.S. courts after the explosion and sinking of the Deepwater Horizon drilling rig in April 2010. Eleven rig workers were killed in the blast, which sent more than 4 million barrels of oil into the Gulf.

BP agreed to pay $525 million to settle a U.S. Securities and Exchange Commission claim that the company underestimated the size of the spill. The company also pleaded guilty to a felony count of obstruction of Congress related to its spill size estimate.

The plea was part of a $4 billion settlement of criminal charges brought by the U.S. against BP over the incident. The company also pleaded guilty to 11 other felony counts related to the rig workers’ deaths and two misdemeanor environmental law violations.

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BP is currently between phases of a different trial in federal court in New Orleans, in which a judge is weighing liability for the spill between BP and its contractors, including Transocean Ltd. (RIG), which owned the rig, and Halliburton Co. (HAL), which provided cementing services.

Testimony in the liability phase of that trial concluded in April, and no decision has been announced. The second trial phase will focus on the size of the spill, which will affect the size of the fine BP would pay for violating the U.S. Clean Water Act. That phase is scheduled to begin in September.

The case is In Re BP Plc Securities Litigation, 4:10-md-2185, U.S. District Court, Southern District of Texas (Houston).