City Comptroller John C. Liu and the New York City Law Department today announced that the New York City Pension Funds have filed a lawsuit against British Petroleum (NYSE: BP) seeking to recover investment losses caused by BP’s fraudulent statements issued prior to, and after, the April 20, 2010 Deepwater Horizon disaster.
“BP failed to disclose to shareowners the serious risks involved in its offshore drilling operation,” Comptroller Liu said. “After the spill began, it misleadingly attempted to minimize the extent of the damage and the cost to shareowners.”
“In light of the Supreme Court’s ruling in Morrison v. National Australia Bank, Ltd., the City Pension Funds are barred from seeking recovery from BP under federal securities laws for the vast majority of its losses,” noted Inga Van Eysden, Chief of the New York City Law Department’s Pensions Division. “We strongly believe the Funds deserve to be compensated for BP’s fraudulent actions and are therefore pursuing this case.”
The New York City Pension Funds’ complaint, filed in the Southern District of New York, alleges that BP and its officers and directors failed to disclose the material facts regarding the dangers inherent in the offshore drilling operation, the extent of the leak, and the estimated cost of the cleanup.
The estimated transactional investment losses to City pension beneficiaries caused by BP’s misconduct and fraudulent behavior exceed $39 million.
On April 20, 2010, BP’s Deepwater Horizon rig began leaking oil into the Gulf of Mexico. At first, BP officials said the rig was leaking a few thousand gallons a day. Weeks later, it acknowledged that over 206 million gallons of oil had poured into the Gulf.
A class action suit against BP was filed that year under federal securities law in the U.S. District Court for the Southern District of Texas. However, in a decision dated February 13, 2012, relying on the Supreme Court’s holding in Morrison v. National Australia Bank, Ltd., 130 S.Ct. 2869 (2010), the Texas court dismissed all claims relating to BP shares purchased on the London Stock Exchange. As a result, that litigation provides no recourse for recovering the majority of the City Pension Funds’ losses on ordinary shares that were purchased abroad. The current lawsuit primarily focuses on state law claims in an effort to recover those losses.
New York City’s legal team includes Valerie Budzik and Richard Simon of the Comptroller’s General Counsel’s Office, and Inga Van Eysden and Keith Snow of the New York City Law Department’s Pensions Division. The City Pension Funds are represented by outside counsel Pomerantz Grossman Hufford Dahlstrom & Gross LLP, whose legal team includes Marc Gross, Jason Cowart, and Matthew Tuccillo.
The New York City Law Department is one of the oldest, largest, and most dynamic law offices in the world, ranking among the largest law offices in New York City and one of the largest public law offices in the country. Tracing its roots back to the 1600s, the Department has an active caseload of 80,000 matters and transactions in 17 legal divisions.
The Pomerantz Firm, with offices in New York, Chicago, San Diego, and Weston, Florida is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust litigation, and was a pioneer in the field of securities class actions.
New York City Comptroller John C. Liu serves as the investment advisor to, custodian, and trustee of the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and the Board of Education Retirement System. The New York City Pension Funds held a combined 2,822,840 shares in British Petroleum valued at $19,301,743.45 as of April 15, 2013.