BP's other victims are its shareholders

Updated 18 November 2012
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BP's other victims are its shareholders

NEW YORK: As part of BP's historic $4.5 billion deal Thursday to resolve criminal and civil charges related to the Deepwater Horizon oil spill in 2010, the British oil company agreed to pay a $525 million penalty to the Securities and Exchange Commission for defrauding its own investors.
The settlement, which is the third-largest in SEC history, is based on the agency's claims that BP violated US securities laws when company executives filed false reports with the SEC and made false public statements about how much oil was flowing out of BP's well and into the Gulf of Mexico. The SEC announced that the money would be used to compensate investors for their losses by way of a Fair Fund.
I'm glad the SEC plans to get some money back to the BP investors who lost billions after the Deepwater Horizon spill because, at least for the vast majority of holders of BP common stock, that's their only hope of recovery from BP's (alleged) violation of federal securities laws. The oil spill took place in April 2010 and shareholder class actions followed quickly thereafter. But by the time the BP securities litigation was consolidated before US District Judge Keith Ellison of Houston in August 2010, you know what had happened: The US Supreme Court issued Morrison v. National Australia Bank, which held that investors have no cause of action under US securities laws for losses on foreign-traded shares.
In effect, the BP securities class action, at least for holders of BP common shares, was over before it started. Around 30 percent of BP shares are traded on US exchanges as American Depository Receipts. ADR holders, whose claims remain alive after Morrison, are still litigating their class action against
BP in Houston. They've survived BP's motion to dismiss and have been granted access to the evidence emerging in the consolidated personal injury litigation against BP in federal court in New Orleans.
According to co-lead counsel Steven Toll of Cohen Milstein Sellers & Toll, the ADR holders are fighting with BP's lawyers at Sullivan & Cromwell over whether investors can add some more potentially actionable alleged misstatements to their latest complaint, which already goes way beyond the SEC's assertions about oil flow rate misrepresentations.
But despite the best efforts of class counsel from Cohen Milstein, Berman DeValerio and Yetter & Coleman, holders of BP common shares have no viable federal claims against BP. The lead plaintiffs in the class action, state pension funds of New York and Ohio, lost almost $200 million in their investment in BP common shares, yet they won't recover any of it in the federal case.
Some of the common stockholders still have alternative routes to BP's wallet. They can't bring classwide claims based on state fraud laws, but several individual state pension funds with sizable losses have sued on their own, asserting state securities and fraud claims. BP has removed those cases to Ellison's federal courtroom in Houston, where they've just begun to be litigated. And according to class Toll of Cohen Milstein and Glen DeValerio of Berman DeValerio, a German law firm is soliciting BP shareholders for a potential case in the Netherlands, which permits a form of group litigation by shareholders. It's way too early to predict whether anything will come of that effort.
DeValerio and Toll were more resigned than angry when I spoke with them Thursday about BP's settlement with the SEC and what might have been in the shareholder class action. "It's encouraging from the point of view that the SEC's case developed the way we expected it to. This supports everything that we've said," DeValerio told me. Toll said that BP's admissions can only help in the ADR holders' ongoing class action. "I guess it makes me annoyed in general that Morrison is the law," Toll said. "It's just terrible for investors."
And just think: If it hadn't been for the drafters of Dodd-Frank, the SEC wouldn't have a case against BP either.
Morrison knocked out enforcement actions against foreign companies, but Congress restored the extraterritorial reach of the SEC and the Justice Department for securities violations when it passed Dodd-Frank reforms in July 2010, a month after the Morrison ruling. Dodd-Frank also included a provision requiring the SEC to present a report on Morrison's impact to Congress. You may recall that when the SEC issued that report in April, the commissioners declined to make recommendations about passing a law to roll back the Supreme Court's ruling.
DeValerio and Toll said no one should expect the BP example to change minds in Congress — and they're probably right. But it should.
— Alison Frankel writes On the Case blog for Thomson Reuters News & Insight.
The views expressed are her own.


Manchester United inflict more semifinal misery on sorry Spurs

Updated 21 April 2018
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Manchester United inflict more semifinal misery on sorry Spurs

  • Manchester United come from behind to make FA Cup final.
  • Mauricio Pochettino yet to win a trophy as manager.

A third cup final with Manchester United for Jose Mourinho. More FA Cup semifinal misery for Tottenham.
While Mauricio Pochettino wins admiration for his style of football, the manager has yet to actually win a trophy in management.
A 2-1 collapse to United at Wembley Stadium on Saturday left Tottenham reeling from an eighth successive loss in the FA Cup semifinals.
Pochettino is responsible for two of the setbacks, having also fallen short against Chelsea last season.
At the stadium where Tottenham have been playing their home matches this season, Dele Alli's goal gave the 1991 FA Cup winners hope of turning around their miserable record in world football's oldest knockout competition.
But Alexis Sanchez leveled in the 24th minute and Ander Herrera struck the winner in the second half. It ensured Mourinho, who won the League Cup and Europa League in his first season at United, has a chance to also end this campaign with silverware against Chelsea or Southampton in the FA Cup final.
"We're getting used to being in finals," Herrera said. "This club is all about titles and finals."
While Mourinho has fallen short in the English Premier League behind newly crowned champion Manchester City, United are second and on course for their highest finish since Alex Ferguson retired in 2013.
Tottenham would settle with holding onto fourth place to secure a third season in a row in the Champions League.
Liverpool missed a chance to considerably stretch its advantage over Tottenham in one of Saturday's two league games. Juergen Klopp's side threw away a two-goal lead to draw with last-place West Bromwich Albion 2-2 and move only three points ahead of Tottenham.
Chelsea, who plays Southampton in the other FA Cup semifinal on Sunday, are five points behind Tottenham with four games remaining.

POGBA TRANSFORMED
When United fell behind to Tottenham, Paul Pogba was culpable.
A high ball was launched forward by Tottenham, a lethargic Pogba didn't try to break sweat in an attempt to prevent it reaching Eriksen. It allowed the Dane to whip in a cross for Alli to slide onto at the far post and strike past David De Gea in 11th minute
Had Harry Kane made a connection at the far post with Son Heung-min's cross three minutes later, Tottenham might have extended their lead.
Instead, United were able to draw level. Pogba made amends for his earlier inertia by dispossessing Mousa Dembele and delivering a cross that Sanchez headed past static goalkeeper Michel Vorm.
Sanchez did the hard work to create the winner in the 62nd, holding off Kieran Trippier and rolling the ball into the penalty area where Jesse Lingard teed up Herrera to shoot past Vorm.