NEW ORLEANS (CN) - A BP "senior responder" to the Deepwater Horizon oil spill illegally dumped $1 million of company stock based on inside information about the catastrophe, the SEC claims in court.
The SEC sued Keith A. Seilhan in Federal Court.
Seilhan had worked for BP for 20 years and was "a senior responder for BP during the 2010 Deepwater Horizon oil spill in the Gulf of Mexico," the SEC says in the lawsuit.
Seilhan was assigned to coordinate the cleanup in the Gulf and on the coast from the company's Incident Command Center in Houma, La., the SEC says.
The allegations in the lawsuit do not reflect well upon Seilhan or BP.
"Within days, Seilhan had received nonpublic information relating to the breadth and scope of the evolving disaster, including oil flow estimates and data relating to the volume of oil floating on the surface of the Gulf," the complaint states.
It continues: "By April 29, 2010, BP was publicly estimating that the flow rate of the spill was up to 5,000 barrels of oil per day ('bopd'), as set forth in its filings with the Commission. However, the Company's public estimate was significantly less than the actual flow rate occurring at the time, which was estimated later to be between 52,700 and 62,200 bopd.
"In performing his duties and responsibilities, Seilhan received material, nonpublic information indicating that the magnitude of the oil spill, and, in turn, BP's potential liability and financial exposure, was likely greater than the up to 5,000 bopd being reported by BP to the public.
"On April 29 and 30, 2010, while in possession of this material, nonpublic information, and in breach of duties owed to BP and its shareholders, Seilhan caused to be sold his and his family's entire $1 million portfolio of BP securities. Specifically, defendant caused to be sold his and his family's holdings in the BP Stock Fund, a fund consisting almost entirely of BP American Depository Shares ('ADSs'), held in defendant's and his family's retirement accounts at BP. In addition, defendant exercised three different sets of options to purchase BP ADSs and immediately sold the underlying shares.
"As a result of his illegal trading, Seilhan realized unjust profits and avoided losses in excess of $100,000. Following Seilhan's trades, the price of BP ADSs declined by approximately 48 percent over time, reaching its lowest point in late June 2010."
The SEC seeks disgorgement of ill-gotten gains, penalties and an injunction.