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LAFAYETTE, La. — (Mealey’s) A putative class of investors sued BP, plc. in a Louisiana federal court on May 21, alleging that the company caused its stock price to become artificially inflated by issuing false or misleading statements about the safety of its Gulf of Mexico operations, leading to a 20 percent drop in the company’s stock price following the April 20 oil rig explosion and ensuing oil spill (Robert Ludlow, et al. v. BP, plc., et al., No. 10-cv-00818, W.D. La.).
Robert H. Ludlow filed his class action complaint in the U.S. District Court for the Western District of Louisiana on behalf of all investors who purchased American Depositary Receipts of BP between March 4, 2009, and April 20, 2010. He alleges that the company violated Section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by touting the growth potential of its Gulf of Mexico operations, by highlighting the safety of the operations and by stating that it would be “able to generate tremendous growth with minimal risk,” Ludlow says.
“The truth was that BP was cutting corners and reducing its spending on safety measures in an effort to maximize profits in the Gulf of Mexico,” Ludlow says.
He alleges that the April 20 explosion on the mobile offshore drilling unit the Deepwater Horizon was the result of “inadequate safety mechanisms and faulty cementing over the drilling well.”
“The accident was a predictable [outcome], at least within BP’s offices. For years, Defendant BP has been engaged in systematic and draconian cost-cutting maneuvers in order to improve profits. In making those cuts, BP sacrificed safety, choosing to cut corners instead of ensuring that its oil exploration and production business did not cause injury or harm to their own employees, and the fragile Gulf Coast environment,” Ludlow says.
Several other shareholder suits have been filed in recent weeks over the Deepwater Horizon disaster, including a shareholder derivative suit (Louisiana Municipal Police Employees’ Retirement System, et al. v. Anthony B. Hayward, et al., No. 2:10-cv-01439-MLCF-KWR, E.D. La.; filed May 10) and a shareholder class against the owner of the Deepwater Horizon oil rig, Transocean Ltd. (Thomas Yuen, et al. v. Transocean, Ltd., et al., No. 2:10-cv-01467-JCZ-SS, E.D. La.; filed May 13).
[Editor's Note: Full coverage will be in the June issue of Mealey’s Emerging Securities Litigation. In the meantime, the complaint is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #57-100608-507C. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
For more information, call editor Dylan McGuire at 610-205-1114, or e-mail him at Dylan.McGuire@lexisnexis.com.