There's another headache in prospect for BP (BP.) chief executive Bob Dudley as a series of court rulings has cleared the way for disgruntled UK investors to join the feeding frenzy over Deepwater Horizon.
US law firm Pomerantz is pursuing a class action lawsuit against BP for losses incurred on shares bought by investors before the 2010 disaster. A District Court judge in Texas recently granted class action status to shareholders who had complained that BP wilfully understated the severity of the oil spill. The bottom line is that UK cases can now be heard in the Texan oil hub of Houston under English common law; quite something on the 800th anniversary of the signing of the Magna Carta.
Originally, only those investors who bought BP shares on the NYSE and other US trading floors were allowed to sue across the Atlantic – but the way has been opened up for UK shareholders. The home-grown litigants include local authority pension funds for London boroughs such as Kensington and Chelsea, along with authorities further afield in Cumbria, Lincolnshire and Yorkshire. In an ironic twist, it has also emerged that Shell’s Pension Trust is seeking redress. A number of retail investors who owned BP shares are among the claimants, with others likely to follow suit as the claims are being prosecuted on a no win, no fee contingency basis.
The Houston class action is in addition to earlier claims made by UK investors who had bought shares in BP in the immediate aftermath of the disaster. Those claims were made on the premise that investors would never have bought shares had BP not allegedly made statements that downplayed the difficulties it was having in plugging the Macondo well. BP’s safety regime and policies were also brought into question under the claims. It’s a curious notion why anyone might want to rush out and buy shares in an oil company following a rig explosion that killed 11 people, although it’s often said that it doesn’t pay to be sentimental where investing is concerned.
