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.
Background
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.
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