SEC Investigating BP Trading

Tack on a new and unreported dimension to British Petroleum's catastrophic oil spill in the Gulf of Mexico, a recently initiated investigation by the Securities and Exchange Commission into the trading in BP shares.
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Tack on a new and unreported dimension to British Petroleum's catastrophic oil spill in the Gulf of Mexico, a recently initiated investigation by the Securities and Exchange Commission into the trading in BP shares.

I've learned authoritatively that the SEC is looking into the purchases and sales of all BP shares emanating from here that took place both in the U.S. and abroad, commencing on April 20 and running through June 18.

April 20 was the day BP's Gulf deepwater well blew out, a disaster which killed 11 workers, decimated many businesses, polluted the wars and destroyed wild life in the worst offshore spill in U.S. history.

It's unclear whether the SEC probe might also include a conversation with BP officials on what some critics say has been the company's lack of forthrightness in public statements on the progress of capping the well.

Concurrently, the commission is also investigating trading in the shares of Anadarko Petroleum, a leading oil and gas exploration and production company that holds a 25% stake in the BP oil well.

Adhering to the agency's posture on investigations, an SEC spokesman, John Heine, would neither confirm nor deny the investigations, simply telling me: "Put us down for declining comment."

However, confirmation of these oil spill-related probes is documented in copies of internal SEC documents I just obtained from a regulatory contact which detail the two trading inquiries.

The SEC recently fired off those documents to the brokerage industry in which it solicited the names of all clients who traded in BP and Anadarko shares in specific time periods. The brokerage firms were given 10 days in which to respond to the SEC's requests.

A compliance official at one top brokerage with close ties to the commission figures the trading investigations are unmistakably geared to determining whether anyone, using non-public information, illegally traded on inside information related to the oil spill.

A hedge fund manager actively involved in trading energy shares described the action in BP in the post oil-spill period as "unnatural." He said "at times, the consistent accuracy of some trades almost indicated the buyers and sellers of the stock knew in advance exactly what BP was going to say about how it was faring in its latest efforts to plug the leak."

BP and Anadarko declined to respond to calls seeking comment.

Both BP and Anardarko shares took a nosedive following the revelation of the oil spill. In addition, the stocks of each have frequently risen or fallen on rumors and speculation that the oil leak would soon be capped or that the BP effort would run into lengthy delays. Likewise, BP shares have fluctuated on ongoing talk of a possible takeover of the oil giant, sales of its major assets or possible bankruptcy.

"There was plenty of opportunity to trade and play around and I guess the SEC recognizes that," the compliance official said. "Or maybe they know or heard something."

Since the close of April 19, BP shares have dropped from $59.48 to their current price of $35.20, while Anadarko's stock in the same period has declined from $73.32 to $46.14.

E-mail me at Dandordan@aol.com

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