April 20, 2010 is a date that is seared into the minds of nearly everyone in Texas, as well as a majority of residents in the coastal states in the Gulf of Mexico. It was on this day that a wellhead blowout caused a massive explosion to occur on the oil rig Deepwater Horizon, killing 11 workers and spilling millions of gallons of crude oil into the Gulf.
In the weeks following the explosion, BP's shares fell about 40 percent, leaving many investors demanding answers from BP who, just a few weeks earlier, had allegedly promised them that new safety procedures were already in place for all of its drills. It's because of this promise that has many investors are now suing BP, claiming that the company violated U.S. securities law.
"We believe the evidence will show that BP made substantial misrepresentations with respect to the adequacy of its safety program and spill-response program, and that these misrepresentations caused significant harm to the shareholders," explains one of the lawyers representing individual investors who have sought civil action against BP. According to the complaint filed in the U.S. District Court of Houston, investors are claiming that BP committed securities fraud when it told investors that safety measure were in place when it appeared that not all rigs had implemented the measures.
BP denies the claims however and points out that the company's commitment to safety did not guarantee that and future action would not occur. On top of the criminal proceedings that BP has had to endure over the past few years, the new civil litigation cases have the company wondering if the next few months will show a number of people coming out of the woodwork-so to speak-trying to ride the wave of negligence claims.
Source: The Bloomberg Businessweek, "BP Investors Allowed to Add More Statements to Fraud Case," Laurel Brubaker Calkins and Margaret Cronin Fisk, Feb. 7, 2013