Updated with correction June 30, 2010
BP PLC and State Street Bank & Trust were accused of breaching their fiduciary duties under ERISA over the loss of hundreds of millions of dollars in the company stock option in BP's U.S. 401(k) plan, according to a federal lawsuit filed Monday.
The suit was filed in U.S. District Count in Chicago by plan participant Charis Moule. It seeks class-action status on behalf of participants who lost assets in the BP stock fund as a result of the stock's price collapse since the April 20 explosion of a BP oil rig in the Gulf of Mexico and the ensuing oil leak.
Also named as defendants are BP Corp. North America Inc., BP America Inc., BP Corp. North America Inc. savings plan investment oversight committee, as well as Anthony B. Hayward, CEO; Lamar McKay, member of the savings plan investment oversight committee and chairman and president of BP America; and Gregory T. Williamson, director of trust investments for BP America, Warrenville, Ill., and secretary and member of the committee. Four other committee members also were named in the suit.
SSgA, the investment management arm of State Street Bank & Trust, served as the investment manager of the BP stock fund, according to the suit. State Street Bank also was trustee of the employee savings plan.
“SSBT was a fiduciary of the (employee savings plan) because it had independent discretion and authority to liquidate the BP stock fund” but failed to do so, the suit said.
“In fact, defendants continued to invest and to allow investment of the (plan's) assets in BP (American depository shares) even though they knew or should have known that BP had inadequate safety protocols in place for its gas and oil operations, resulting in a decrease in the value of BP ADS,” according to the lawsuit.
The plan held $2.45 billion of BP American depository shares, amounting to 29% of the total $8.27 billion in plan assets, as of Dec. 31, 2009, according to BP's 11-K report filed June 16, the suit said. The BP ADS lost more than 50% of their value, falling from $59.88 a share on April 19, the day before the Deepwater Horizon explosion, the suit said.
The suit seeks recovery of participant losses and “the profit that had been lost by investing in BP ADS instead of investing in other prudent funds within the (plan),” the suit said.
John Pack, spokesman of London-based BP, said, “We don't comment on legal matters.”
Arlene Roberts, State Street vice president, said: “State Street is confident that it has at all times acted in accordance with its obligations as trustee and investment manager for the company stock fund in the BP plan. State Street denies the claims set out in the complaint and will vigorously defend itself in this matter.”
The Milberg law firm; Miller Law; Harwood Feffer law firm; and Lanier Law Firm are representing the plaintiff.
A separate lawsuit was filed against BP, its directors and executives by Ralph Whitley, a former BP employee and a participant in the same employee savings plan, in U.S. District Court in New York on June 24. That suit also seeks class-action status for BP defined contribution plan participants in the employee savings plan as well as the BP Capital Accumulation Plan, BP Partnership Savings Plan and BP Direct Save Plan, all defined contribution plans, and recovery of losses from BP ADS in the company stock investment option.