Transcript: SEC Enforcement Director Robert Khuzami’s remarks on BP’s $525 million penalty to settle securities fraud related to the Deepwater Horizon oil spill
Edited by Jenny Jiang
Transcript of remarks by SEC Director of Enforcement Robert Khuzami on BP’s agreement to pay $525 million penalty to settle charges of securities fraud during the 2010 Deepwater Horizon oil spill at a press conference in New Orleans on Nov. 15, 2012:
I’m Rob Khuzami, Director of Enforcement at the SEC.
Today, we are announcing that BP has agreed to pay more than a half billion dollars to settle charges that it mislead investors about the rate of oil flowing from the Gulf of Mexico during the Deepwater Horizon disaster.
The $525 million civil penalty represents the third largest civil penalty ever assessed in the history of the Securities and Exchange Commission, and those funds will be used to compensate harmed investors for losses sustained from this fraud.
BP misrepresented in SEC filings that the oil spill flow rate was estimated to be up to 5,000 barrels of oil per day and that 5,000 barrels of oil per day was the current estimate.
In fact, BP was in possession of numerous analyses where 5,000 barrels was, in fact, at the lower or lowest end of the range and those same analyses have upper ranges that were many multiples of 5,000 barrels.
According to our complaint, after these SEC filings, BP executives made numerous public statements in which they stood behind the flow rate estimate of 5,000 barrels despite an ever-growing body of evidence that the estimate was unreasonably low. They also publicly dismissed higher estimates reached by third party scientists and eventually outside groups realized that the actual amount was nearly 10 times the amount that BP had estimated.
The spill and the subsequent concealment of the truth by BP caused devastating loss to the families of the victims, the environment, and undermined the truth-seeking function of Congress.
And by hiding the severity of the spill, BP caused another type of harm that is the SEC’s focus: Harm to its own shareholder, to the investing public, and the financial markets – all of which are entitled to transparent, accurate, and complete information.
In the end, the core of our allegations is that the eyes of the world were on BP in the spring and summer of 2010. The company had an opportunity to provide wholesome, accurate disclosures about the facts needed by the public to make informed investment decisions, and instead BP chose to mislead the public. That is not what we expect from public companies and their management, and in fact, it is exactly in times of crisis that the need for accurate information is most acute.
I want to recognize the incredible hard work and dedication of the SEC staff in the Philadelphia regional office that conducted this investigation, including Colleen Lynch, Brian Thomas, and Matt Raalf. They are the kind of public servants that Americans can be immensely proud of.
I would also like to thank the team from the Department of Justice’s Deepwater Horizon Task Force, who were such great colleagues in this effort. That includes John Buretta, Derek Cohen, and Avi Gesser.
And I want to thank the Attorney General, Associate Attorney General West and Assistant Attorney General Lanny Breuer for their leadership in this investigation.
- Justice.gov: United States v. BP – guilty plea agreement (PDF)
- Justice.gov: United States v. BP – Information for Seaman’s manslaughter, Clean Water Act, Migratory Bird Treaty Act, and Obstruction of Congress (PDF)
- Justice.gov: United States v. Robert Kaluza and Donald Vidrine – criminal indictment (PDF)
- Justice.gov: United States v. David Rainey – criminal indictment (PDF)
- SEC.gov: Securities and Exchange Commission v. BP complaint (PDF)
- WhatTheFolly.com: Transcript: Attorney General Eric Holder’s remarks on BP’s guilty pleas to criminal charges from the Deepwater Horizon oil spill
- WhatTheFolly.com: Transcript: Assistant AG Lanny Breuer’s remarks on BP’s guilty pleas to criminal charges from the Deepwater Horizon oil spill
- WhatTheFolly.com: Transcript: SEC Enforcement Director Robert Khuzami’s remarks on BP’s $525 million penalty to settle securities fraud related to the Deepwater Horizon oil spill
- WhatTheFolly.com: Transcript: Press conference Q&A on BP’s guilty pleas to criminal charges from the Deepwater Horizon oil spill
- Justice.gov: BP Exploration and Production Inc. Agrees to Plead Guilty to Felony Manslaughter, Environmental Crimes and Obstruction of Congress Surrounding Deepwater Horizon Incident
- Justice.gov: Attorney General Eric Holder Speaks at the BP Press Conference
- Justice.gov: Assistant Attorney General Lanny A. Breuer Speaks at the BP Press Conference
- BP.com: BP Announces Resolution of All Criminal and Securities Claims by U.S. Government Against Company Relating to Deepwater Horizon Accident
- BP.com: Statement About Proposed Resolutions of US Federal Government Criminal and SEC Claims Against BP in Connection with the Deepwater Horizon Incident
- SEC.gov: Remarks During News Conference About Enforcement Actions Against BP
- SEC.gov: BP to Pay $525 Million Penalty to Settle SEC Charges of Securities Fraud During Deepwater Horizon Oil Spill
- WhatTheFolly.com: Former BP engineer charged in Deepwater Horizon cover-up