A number of mutual funds are suing BP (BP) in Texas for common fraud, negligent misrepresentation, and statutory fraud. They are contending that they wouldn’t have paid top price for the company’s shares if they’d known the “truth.” Plaintiffs include Skandia Global Funds, Yorkshire Pensions Authority, and GAM Fund Management.
The institutional investors are claiming that they lost huge amounts of money because of misleading statements that BP made about having a priority ‘safety first’ policy and that the oil giant tried to mislead them about the true extent of the 2010 oil spill while downplaying the likely scope of its responsibility for the disaster, which killed 11 people and is now considered the worst offshore spill in our nation’s history. They believe that statements were made to make it seem as if: the leak wasn’t as widespread, BP didn’t do anything wrong to cause the tragedy, and “consequential damages were limited,” not only minimized the seriousness in the decline of BP’s stock price but also caused Plaintiffs to make the decision to buy more shares. The mutual funds are accusing BP executives of exhibiting a “reckless disregard” of what was actually happening and concealing that the oil spill was a lot bigger.
The disaster began on April 20, 2010 when an explosion rocked the Deepwater Horizon, a drilling rig that was licensed to BP. Not only were lives lost, but also in two days, the rig, which sank, left an oil slick of five miles in its wake, with millions of gallons of crude oil spilling out before the well could be capped. Already, BP has put aside about $38 billion for lawsuits involving US authorities over civil claims related to the oil spill. (Criminal charges could be likely).
Following the tragedy, the US Department of Justice sued BP and several companies over federal regulations violations over the safety and operation of oil rigs, including the alleged failure to exercise the needed precautions to secure the rig before the blast and not using the most safe drilling technology.
The mutual funds are filing their lawsuit under Texas law (the US Supreme Court doesn’t allow foreign investors to pursue damages in federal courts) and they want their case to go to trial. The claims are expected to reach the tens of millions of dollars and more investors may join up.
“Many lawyers are not familiar with a statute (27.01 of the Texas Business and Commerce Code) which allows victims of stock (and real estate) fraud to sue for misrepresentations and omissions,” said Houston securities fraud lawyer William Shepherd. “This statute offers some unique advantages, including exemplary damages, and is available for investors, in addition to the Texas Securities Act. ”
“Both these statutes are easier to prove than non-statutory (or ‘common law’) fraud,” said Texas securities attorney Bill Shepherd. “For example, it is not necessary to prove ‘scienter’ (intent) and both offer the opportunity to recover the investors’ legal fees. The statutory fraud statute also provides for recovery of ‘expert fees’ and can be used to include defendants who knowingly benefit from the wrongdoing.”
BP sued by ‘hoodwinked’ funds over Gulf of Mexico spill, Management Today, September 4, 2012
BP sued ‘for hiding truth over safety’ in Gulf oil disaster, The Telegraph, September 4, 2012
BP sued “for hiding truth” over Deepwater, PriceofOil.org, September 4, 2012
27.01 of the Texas Business and Commerce Code, Justia
More Blog Posts:
Lawsuit Challenging BP Cancellation of 2010 First Quarter Dividend After Deepwater Debacle is Dismissed in Texas Court, Stockbroker Fraud Blog, August 10, 2012
BP Oil Spill Payouts Recipients May Be Targeted by Investment Scam Fraudsters, Says SEC, Stockbroker Fraud Blog, October 22, 2010
District Court in Texas Finds that SEC Improperly Deposed Witness in Lawsuit Over Alleged Life Settlement Scam, Stockbroker Fraud Blog, September 1, 2012