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.


German media slams Joachim Loew as Netherlands cruise to victory over Germany

Updated 14 October 2018
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German media slams Joachim Loew as Netherlands cruise to victory over Germany

  • After the World Cup debacle, Loew again finds his team last in their Nations League pool
  • The Germans must win their last two games, against the French on Tuesday and Dutch in Gelsenkirchen

BERLIN: The German press turned viciously on Joachim Loew after the former world champions were hammered by the Netherlands, which leaves the future of Germany’s head coach in doubt with current world champions France looming on Tuesday.

“Not at the moment,” Loew replied in the post match press conference when asked if he can still decide his future following the 3-0 drubbing at the weekend — Germany’s heaviest defeat to the Dutch.
Netherlands captain Virgil Van Dijk gave the hosts a first-half lead before late goals by Memphis Depay and Georginio Wijnaldum capped a golden night for the “Oranje” in Amsterdam.
“That was a brutal and disappointing defeat, especially as we had the game under control in the first 30 minutes,” said Loew, whose contract runs until 2022.
“At the moment, you can literally feel that we do not have the self-confidence that we used to have.”
“After conceding, you could see that recent results have led to a lack of confidence. Why are we not scoring? That’s difficult to answer, we have clear chances.”
It could have been 4-0 as Depay also hit the crossbar in the dying stages as the German defense collapsed in the last 10 minutes.
If Loew’s side loses to France in Paris on Tuesday, it will mean a record sixth defeat for Germany in a calender year.
Having steered Germany to the 2014 World Cup title, Loew was irritated when asked if the heavy defeat was his 168th — and final — international.
“For me, or what?” he replied, flustered, with his 12-year reign in peril.
“We need to move on quickly (to the next question), I am the wrong person to talk to about that.”
He only signed a new contract until 2022 with the German Football Association (DFB) in May, yet unless results improve, his position is becoming untenable.
After the World Cup debacle, when Germany crashed out after finishing bottom of their group, Loew again finds his team last in their Nations League pool.
The Germans must win their last two games, against the French on Tuesday and Dutch in Gelsenkirchen on November 19, or risk relegation.
Loew appears to be safe until the home match against the Dutch in five weeks.
Germany’s main newspapers were brutal with the head coach.
“Bottom marks for Loew! Irritation after questions over his future as a national coach,” said Germany’s top-selling daily Bild.
Football magazine Kicker pointed out that despite Loew’s promises of a fresh start, little has changed.
“New start? Loew’s team are continuing the World Cup story.
“After the 3-0 debacle, the German team is fighting relegation. This is not a snapshot, but the logical consequence after a series of mistakes.
“It raises — again — the question of Loew’s future.”
Germany’s other top papers were equally damning.
“A scary evening,” said Munich-based Sueddeutsche Zeitung, who reported on Saturday that Loew’s contract contains a clause allowing either party to terminate it early.
For a proud football nation, top newspaper Welt pointed out an uncomfortable truth, “3-0 defeat to the Netherlands — Germany is just a mediocre European nation.”
“Loew must break away from his base of World Cup winners,” commented the paper, echoing what many fans feel.
“Loew is slowly running out of arguments. He must react — the team needs new impulses.”