US regulators were investigating BP PLC on Monday for possible insider trading related to its Gulf of Mexico oil spill, dealing a potential blow to the energy giant’s efforts to restore investor confidence.
Two sources familiar with the preliminary Securities and Exchange Commission (SEC) investigation said the alleged insider trading took place after the start of the BP oil spill on April 20.
The SEC is also investigating whether the British company properly disclosed information on risks related to its deepwater oil operations in the Gulf, one of the sources said.
A BP spokesman did not immediately return calls for comment, but the investigation comes at a bad time for the British company. It is trying to rehabilitate its image and tamp down widespread public anger in the US over its handling of the spill, the worst in US history.
For roughly two months after an explosion sank the Deepwater Horizon drilling platform, BP’s stock price dropped steadily, losing half of the company’s value.
The sources cautioned that the investigation is preliminary and requested anonymity because they have not been authorized to speak publicly about the matter.
Last week, BP said the SEC and the Justice Department were conducting “informal inquiries into securities matters arising in relation” to the explosion at the offshore drilling rig that ruptured BP’s well.
The SEC declined comment.
BP, which has lost about 40 percent of its market value since the start of the crisis, saw its share price rise 1.8 percent in London. US listed shares were up nearly 2 percent in midday trading in New York.
Mark Coffelt, chief investment officer at Empiric Advisors in Austin, Texas, said investors remained concerned about how much the spill would end up costing BP, which has already announced plans to sell US$30 billion in assets over the next 18 months to help cover its liabilities.
BP in its annual report for last year spelled out some operational risks, including potential oil spills.
“Failure to manage these risks could result in injury or loss of life, environmental damage, or loss of production and could result in regulatory action, legal liability and damage to our reputation,” the report said.
BP also said in that filing that drilling and production was subject to “natural hazards and other uncertainties, including those relating to the physical characteristics of an oil or natural gas field.”
BP did not immediately return calls for comment.
After coming under harsh criticism for having missed major investment scandals in the last years, the SEC is acting significantly more aggressively.
Last week, the regulator accused septuagenarian brothers Samuel and Charles Wyly of earning millions by trading on nonpublic information.
The SEC also took a bold move against Goldman Sachs Group Inc and charged the bank with fraud earlier this year. Goldman has since settled with the SEC over civil fraud allegations in a subprime mortgage product.
“Clearly this means that the current crew [at the SEC] is taking a more aggressive stance,” said Richard Sauer, a former administrator in the Securities and Exchange Commission’s enforcement division.
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