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SEC probes BP potential insider trading

U.S. securities regulators are probing potential insider trading at BP in the weeks and months following the Gulf of Mexico oil spill, sources familiar with the investigation said.
/ Source: Reuters

U.S. securities regulators are investigating whether people may have illegally profited from trading on nonpublic information at BP Plc in the weeks and months following the disastrous Gulf of Mexico oil spill, two sources familiar with the investigation said on Monday.

The 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, 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 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.

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.