NEW ORLEANS - (Mealey's)
BP PLC announced on Nov. 15 that it would plead guilty to a dozen felony
charges brought by the federal government and pay $4.5 billion in penalties
over its involvement in the explosion of the Deepwater Horizon oil rig and
ensuing oil spill in the Gulf of Mexico.
The company said it would plead guilty to 11 felony
counts of misconduct and one felony count of obstruction of Congress as well as
one misdemeanor count under the Clean Water Act and one misdemeanor count under
the Migratory Bird Treaty Act.
Of the $4.5 billion penalty, the company said $525
million will be used to settle claims brought by the U.S. Securities and
Exchange Commission, which alleges that within the first 14 days of the
incident in 2010, BP "materially misrepresented and understated the estimated
range of flow rate of oil leaking from the well in three public filings
furnished to the Commission" in violation of Sections 10(b) and 13(a) of the
Securities Exchange Act of 1934 and SEC Rules 10b-5, 12b-20 and 13a-16.
Flow Rate Estimate
"BP also omitted material information from these three
public filings regarding its own internal data, estimates, and calculations
indicating that the flow rate estimate contained in these filings was
unjustifiably low. BP made these material misrepresentations and
omissions in, inter alia, its Reports on Form 6-K furnished to the
Commission on April 29 and 30 and May 4, 2010," the SEC says in its complaint,
filed in the U.S. District Court for the Eastern District of Louisiana (Securities
and Exchange Commission v. BP p.l.c., No. 12-2774, E.D. La.).
BP explained that the amount will be paid incrementally
over the course of five years, while the SEC stated that the $525 million
settlement is the third-largest in agency history.
As part of the SEC settlement, BP will be enjoined from
violating Sections 10(b) and 13(a) and Rules 10b-5, 12b-20 and 13a-16.
The $4.5 billion penalty will not resolve any of the federal
government's claims under the Clean Water Act, federal and state law claims on
natural resource damages and civil claims pending in the multidistrict
litigation in the U.S. District Court for the Eastern District of Louisiana, BP
explained. The company said that it is prepared to vigorously defend
itself against the remaining civil claims.
In February, the company announced that it had agreed to
spend $7.8 billion to resolve economic loss and medical monitoring claims
stemming from the oil spill. Final approval of the settlement is
currently pending before Judge Carl Barbier, who presided over a fairness
hearing Nov. 8.
The present agreement is subject to final approval.
The SEC is represented by Daniel M. Hawke, Elaine C.
Greenberg, Colleen K. Lynch, G. Jeffrey Boujoukos, Michael J. Rinaldi, Brian P.
Thomas, Matthew S. Raalf, Kelly L. Gibson and Michael F. McGraw of the SEC in Philadelphia.
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