WASHINGTON/BOSTON (Reuters) - U.S. securities regulators are investigating whether people may have illegally profited from trading on nonpublic information at BP Plc (BP.L) (BP.N) in the weeks and months following the disastrous Gulf of Mexico oil spill, two sources familiar with the investigation said on Monday.
The U.S. Securities and Exchange Commission is also investigating whether BP properly disclosed information on risks related to its deepwater oil operations in the Gulf of Mexico, one of the sources said.
For roughly two months after an explosion sank the Deepwater Horizon drilling platform, BP’s stock price dropped steadily and the company’s value fell by half.
The SEC probe is one of a number of investigations of the company and others tied to the spill. Congressional committees and a presidentially appointed panel are probing various aspects of the spill. The Justice Department is looking at potential civil and criminal violations of federal environmental laws.
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 in its annual report for 2009 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. The energy giant faces more than 300 private civil lawsuits. The government investigations are expected to help the private lawsuits, which cover everything from personal injury to economic loss as a result of fewer people eating at Gulf Coast seafood restaurants and seafood caught in those waters.
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 (GS.N) and earlier this year charged the bank with civil fraud in connection with a subprime mortgage product. Goldman subsequently settled with the SEC.
“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.
Additional reporting by Tom Hals in Wilmington, Delaware; Editing by Gerald E. McCormick and Steve Orlofsky