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BP Settles Class Action

Deepwater Horizon

By MarEx 2016-06-07 20:32:21

BP has agreed to pay $175 million to shareholders who brought a class-action lawsuit that accused the oil company of misleading them by understating the severity of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

BP said the claims will be paid during 2016-2017.

However, the company said in a statement this settlement does not resolve other securities-related litigation in connection with the spill.

In 2014, U.S. District Judge Keith Ellison in Houston said investors who bought BP's American depositary shares soon after the explosion could pursue claims as a group that BP publicly "lowballed" the oil flow rate, and that the share price "did not reflect the magnitude of the disaster facing the company." 

The investors sued the company in Houston federal court for the losses they suffered, and the class-action complaint was scheduled to go to trial next month.

In separate legal action, U.S. Judge Carl Barbier in April 2016 granted final approval to the company's civil settlement over the Gulf of Mexico oil spill after it reached a deal in July 2015 to pay up to $18.7 billion in penalties to the U.S. government and five states.

The rig explosion on April 20, 2010, the worst offshore oil disaster in U.S. history, killed 11 workers and spewed over three million barrels of oil onto the shorelines of several states over 87 days. 

The resulting damage prompted a flood of lawsuits. As at the end of March 2016, BP has incurred legal and cleanup costs of over $56 billion.