BP, Bank of America, Samsung, AIG, Credit Suisse, Highland in Court News

A former BP Plc worker taking part in its employee savings plan sued the U.K. oil company and a U.S. affiliate, claiming they wrongly kept declining depositary receipts in the plan portfolio after the Gulf of Mexico spill.

BP shares have lost about 35 percent of their value since the blast and closed at 425.35 British pence in London stock market trading Aug. 6. Its American depositary shares have fallen 32 percent to $41.33.

Thomas P. Soesman filed the complaint Aug. 5 in federal court in Chicago. The London-based company last week used a cement cap to plug its Macondo well, which leaked almost 5 million barrels of crude oil after an April 20 explosion caused the rig above it to sink.

“A prudent fiduciary in like circumstances would have evaluated the foregoing and acted accordingly to protect the plan from large losses,” according to Soesman’s complaint.

This is at least the eighth lawsuit filed against BP over the company savings plan since the start of the spill. Soesman seeks class action, or group, status on behalf of everyone who was a plan participant or beneficiary after Oct. 30, 2009.

Among the defendants named in the complaint are Chicago- based BP Corp. North America Inc., director of trust investments Gregory Williamson, human resources Vice President Stephanie Atkins and other members of the company’s investment committee.

Scott Dean, a U.S.-based spokesman for the oil company, didn’t reply to a voice-mail message seeking comment.

The case is Soesman v. BP Plc., 10cv4940, U.S. District Court, Northern Illinois (Chicago).

Bank of America Sues Verona Amid City Review of Swap Contracts

Bank of America Corp. sued the Italian city of Verona in a London court in at least its second attempt to preempt potential legal action in Italy over municipal derivatives.

Merrill Lynch managed a 257 million-euro ($338 million) bond sale for the city in 2006, and adjusted payments on the 20- year securities by using swaps. Verona is reviewing the agreements, city finance director Pier Luigi Paloschi said by telephone Aug. 6. The city hasn’t been notified of a London claim by the bank, he said.

Bank of America’s Merrill Lynch International Bank Ltd. unit filed a claim at London’s high court on July 28, court documents show. The bank is seeking to confirm that its contracts with the municipal authority are valid and that it has met its obligations, according to a person familiar with the claim who declined to be identified because the dispute is private. An official at the lender in London declined to comment.

Bank of America and UBS AG filed last month a similar claim against the region of Lombardy, which was planning to sue the banks in Italy over fees they charged on the derivatives. The London claims may make it harder for the municipal authorities to pursue cases in Italy, lawyers said.

Allegations of fraud in the sale of derivatives from Puglia, on the heel of Italy, to Liguria, the region that borders France along the Mediterranean, are prompting local governments to review their arrangements, while lawmakers have proposed rules that limit the use of swaps.

Cuomo Seeks Damages From Alleged LCD Price Fixing

New York Attorney General Andrew M. Cuomo is seeking to recover damages from Samsung Electronics Co. and other manufacturers accused of colluding to fix prices of the liquid- crystal displays used in televisions, computers and mobile phones.

An antitrust lawsuit he filed Aug. 6 in state Supreme Court in Manhattan seeks damages from 1996 to 2006 for the state, for local governments and for other public entities that bought goods containing the screens, Cuomo said in a statement. The filing couldn’t immediately be confirmed with the court clerk.

Companies including AU Optronics Corp., Toshiba Corp. and Hitachi Ltd., and their U.S. counterparts, worked together for a decade to avoid price competition in the $70 billion LCD market, Cuomo said. They met secretly to set prices, shared production information and agreed to output levels, he said. Some have already pleaded guilty to U.S. antitrust charges, according to the complaint.

“An illegal cartel eliminated competition in the marketplace for LCD screens, made its own secret decisions to boost prices and then took steps to make those high prices stick,” Cuomo said in the statement. Richard Bamberger, a spokesman for Cuomo, said damages are in the tens of millions of dollars.

Many of the companies and their executives pleaded guilty to federal criminal antitrust violations and paid more than $890 million in fines, the complaint said. They include Hitachi Displays Ltd., LG Display Co. and its subsidiary LG Display America Inc., and Sharp Corp., the suit said.

Chris Goodhart, a spokeswoman for Samsung, didn’t return a call seeking comment. A representative of LG Display couldn’t be reached for comment. An e-mail to the AU Optronics publicity office wasn’t returned. A Toshiba spokesman said the company is studying the complaint. Sharp and Hitachi didn’t return messages seeking comment.

A message sent to the public relations department of Chimei Innolux, which owns defendant Chi Mei Optoelectronics Corp., wasn’t responded to. A representative of Chi Mei Optoelectronics USA in San Jose, California, referred questions to Taiwan.

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Lawsuits/Pretrial

States’ Attorneys Back Health-Care Lawsuit in Filing

Attorneys general for 20 states challenging the health-care law signed by President Barack Obama filed court papers opposing a bid by the U.S. for dismissal of the lawsuit.

“The Patient Protection and Affordable Care Act represents an unprecedented intrusion on the sovereignty of the states and the freedom of their citizens,” according to the states’ brief filed Aug. 6 with U.S. District Judge Roger Vinson in Pensacola, Florida.

The health-care overhaul, signed into law by Obama on March 23, is intended to extend the federal Medicaid program to cover 16 million more Americans, according to an estimate from the nonpartisan Congressional Budget Office. The legislation, which takes effect in 2014, will cost the states billions of dollars to administer.

Thirteen of the 20 attorneys general sued to invalidate the legislation the same day it was signed, arguing that the measure placed an unfair burden on state budgets. The other states joined later.

A separate complaint was filed by Virginia at the federal courthouse in Richmond, asserting that an included mandate directing individuals to obtain coverage was unconstitutional.

Lawyers for the U.S. on June 16 asked Vinson to throw out the Pensacola case, saying it was prematurely filed and fails to identify any injury suffered by the states.

Vinson has scheduled a non-jury trial in the case before him for Sept. 14.

The 20-state case is State of Florida v. U.S. Department of Health and Human Services, 10-cv-00091, U.S. District Court, Northern District of Florida (Pensacola). The smaller case is Commonwealth of Virginia v. Sebelius, 10-cv-00188, U.S. District Court, Eastern District of Virginia (Richmond).

AIG Says Italian Life Unit Investigated by Milan Prosecutor

American International Group Inc. said an Italian subsidiary is being investigated by a prosecutor in Milan and was sued by policyholders after suspending client withdrawals from some investments that declined in value.

AIG’s Alico Life International Ltd. is cooperating with Italian regulators, the company said Aug. 6 in a regulatory filing reporting quarterly earnings. Clients said the company provided inadequate disclosure about the investments, AIG said. Withdrawals were halted in late 2008 as the parent company faced a liquidity squeeze that forced a U.S. bailout.

“The public prosecutor in Milan had opened a formal investigation into the actions of employees of ALIL, as well as employees of ALIL’s major distributor, based on a policyholder’s complaint,” New York-based AIG said in the filing. The insurer is “in discussions to address their concerns as well as those of the affected policyholders.”

AIG agreed in March to sell Alico to MetLife Inc. for about $15.5 billion. As part of the deal, AIG agreed to indemnify MetLife for legal claims and regulatory fines tied to suspended funds, AIG said in the filing.

Mark Herr, a spokesman for AIG, had no immediate comment. MetLife’s Christopher Breslin didn’t return a call.

BP’s Maximum $18 Billion Spill Fine Is Likely to Be Lowered

After months of technical setbacks, BP Plc in early August was finally on the verge of capping its runaway Macondo well, source of the largest oil spill in U.S. history. But even as the oil giant’s focus shifts toward the massive cleanup of the Gulf of Mexico, it now must contend with expensive civil fines stemming from the disaster.

BP may face as much as $17.6 billion in civil penalties, based on an expert panel’s finding Aug. 2 that 4.1 million barrels of oil leaked from its well into the Gulf. Environmental lawyers say BP is likely to negotiate a lower penalty. Still, the fines may crimp the company’s ability to pay for cleanup costs, force it to sell more assets and cut into investment plans of incoming Chief Executive Officer Robert Dudley, Margaret Cronin Fisk and Laurel Brubaker Calkins Report in Bloomberg Businessweek’s Aug. 9 issue.

The Clean Water Act makes BP, as owner of the oil, liable for fines of $1,100 per barrel spilled even if it did nothing wrong, says Wayne State University law professor Noah Hall in Detroit. The penalty jumps to $4,300 per barrel if BP was grossly negligent. Hall says gross negligence in a civil case would include making “conscious decisions” that increased the likelihood of an incident like the blowup while engaged in a risky business, such as deepwater drilling.

BP Chairman Carl-Henric Svanberg told Bloomberg Television on July 27 that the company doesn’t believe it will be found grossly negligent or determined to be the sole responsible party for the spill.

Hall says the fine ultimately imposed isn’t likely to be “anything like” the $17.6 billion maximum because BP and the government have a mutual interest in a lower number. “Both the federal government and any judge will take into account that BP has spent or will spend billions to remediate and clean up the spill,” he says. “At some point BP says: ‘If you hit us with the maximum in penalties, plus $20 billion in cleanup and $20 billion in claims, you’ll push us into bankruptcy.’ The federal government doesn’t want to push BP into insolvency.”

The main class action case is In Re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, MDL Docket No. 2179.

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Perot Trust Wins Dismissal of Investor Suit on Losses

A lawsuit in which billionaire H. Ross Perot’s family trust was accused of mismanaging a fund so that it went from $2.5 billion to “less than zero” was dismissed by a federal judge in Dallas.

Outside investors in Parkcentral Global Hub Ltd. said the fund lost as much as $3 billion as its managers falsely claimed it was hedged against such losses. Perot, 80, founder of Electronic Data Systems Corp., ran for U.S. president in 1992 and 1996. He wasn’t named as a defendant in the case.

The judge said the investors can file a new complaint. A claim of mismanagement required the investors to first seek a remedy from the general partner, Parkcentral Capital Management LP, or explain why they couldn’t, U.S. District Judge Barbara M.G. Lynn said Aug. 5 in a written opinion.

The case is Southern Avenue Partners LP v. Perot Family Trust, 09-cv-765, U.S. District Court, Northern District of Texas (Dallas).

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Trials/Appeals

Ex-Credit Suisse Broker Butler Asks for Time to do Laundry

Ex-Credit Suisse Group AG broker Eric Butler, free on bail while he appeals his securities-fraud conviction, asked a judge to remove his electronic monitoring or to set a schedule that would allow him to do laundry, shop for groceries and take his son to playgrounds.

“Even though the Butlers have very little resources, because Mr. Butler is currently on home detention with electronic monitoring, the Butlers must pay for a babysitter to take” their son “to a playground 3 times per week, for as much time as the Butlers can afford,” Paul T. Weinstein, one of Butler’s lawyers, wrote Aug. 6 to U.S. District Judge Jack B. Weinstein in Brooklyn, New York.

The attorney also requested permission for time for Eric Butler to take over shopping and laundry duties from his wife, who is the only parent working. The laundry machines are on another floor of the family’s apartment building, according to the letter.

Judge Weinstein on June 25 granted Butler his request to stay out of prison while he appeals his conviction for fraudulently selling securities that cost investors more than $1.1 billion.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).

Kebble Murder Accused Loses Appeal to Delay Trial

Glenn Agliotti, on trial for the 2005 murder of South African gold magnate Brett Kebble, lost a bid in a Johannesburg court to interrupt proceedings so that he can push state prosecutors to drop the charges against him.

It wouldn’t be “appropriate” to postpone the trial because the court doesn’t yet know whether the prosecution has a case against Agliotti, Judge Frans Kgomo said in the South Gauteng High Court Aug. 6. The trial was adjourned to Aug. 10.

“This court has no way of knowing if the prosecution has an ‘ace up its sleeve,’” Kgomo said. “This court has no way of guessing what the so-far unheard witnesses will say. In the circumstance peculiar to this case it is my view that postponing the case to a date a month in the future would not be appropriate.”

Four men who admitted to being involved in shooting Kebble in Johannesburg in September 2005 testified in the case against Agliotti, a convicted drug-dealer, in exchange for immunity from prosecution. The 41-year-old Kebble, who was the chief executive officer of three gold companies, had asked Agliotti and the witnesses to help him die when he descended into a personal crisis, witness Clinton Nassif testified.

Kebble was facing fraud charges stemming from the disappearance of millions of dollars of assets from gold miner Randgold & Exploration Ltd., which he led.

Nassif and the three other witnesses had given contradictory evidence that proved the state didn’t have a case, Agliotti’s lawyer Laurence Hodes told the court Aug. 5.

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Verdicts/Settlements

Hurd’s Accuser ‘Saddened’ by His Departure From HP

Jodie Fisher, a former actress who accused former Hewlett- Packard Co. Chief Executive Officer Mark Hurd of sexual harassment, said she is “surprised and saddened” that he lost his job over the matter.

Fisher and Hurd have settled the claim privately, according to a statement Aug. 8 from her lawyer, Gloria Allred. Hurd resigned Aug. 6 after an investigation found he violated HP’s standards of business conduct by submitting inaccurate expense reports and concealing his personal relationship with the woman, who worked as a contractor at HP for two years. The company found that Hurd didn’t violate its harassment policy.

“I was surprised and saddened that Mark Hurd lost his job over this. That was never my intention,” Fisher, who wasn’t identified until Aug. 8, said in the statement. “Mark and I never had an affair or intimate sexual relationship. I first met Mark in 2007 when I interviewed for a contractor job at the company.”

The expenses, which ranged between $1,000 and $20,000, were for meals and travel, and Hurd intends to pay back the amount, a person with knowledge of the situation said. HP didn’t make any payments in the settlement of the harassment claim, according to another person familiar with the matter.

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Oil Consultant Giffen Pleads Guilty to Misdemeanor

Oil consultant Jim Giffen, after more than seven years of fighting charges that he bribed government leaders in Kazakhstan, pleaded guilty to a tax-related misdemeanor.

Giffen said Aug. 6 in federal court in Manhattan that he failed to supply information about a foreign bank account in a 1996 tax return. Mercator Corp., Giffen’s investment bank, pleaded guilty to a single violation of the Foreign Corrupt Practices Act, the U.S. anti-bribery law. Under U.S. sentencing guidelines, he faces no more than six months in prison and may receive no jail time when he’s sentenced on Nov. 19.

Giffen, 69, was arrested in March 2003 and accused of paying $84 million to Kazakh President Nursultan Nazarbayev and other senior officials in violation of the FCPA. He is free on $250,000 bail and living in Mamaroneck, a New York suburb, since his arrest.

“Jim Giffen is gratified to begin to put this matter behind him, more than seven years after the indictment in the case and 10 years after the investigation began,” his lawyer, William Schwartz of Cooley LLP in New York, said after the court proceeding.

Giffen declined to comment after the hearing, saying only that it was “another step” in the process.

Michael Perlis, a lawyer at Stroock & Stroock & Lavan LLP in Los Angeles who isn’t involved in the case, called the plea “a face-saver for the government.”

Giffen “was basically exonerated from the more serious charges against him,” said Perlis, who helped draft the FCPA while working at the Securities and Exchange Commission in the 1970s.

An American citizen who worked as a middleman for U.S. oil companies in the 1990s, Giffen has denied allegations that he bribed leaders of Kazakhstan to facilitate oil transactions. He said U.S. intelligence agencies condoned his actions or gave him reason to believe they did.

The case is U.S. v. Giffen, 03-CR-00404, U.S. District Court, Southern District of New York (Manhattan).

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SingTel Wins S$1.7 Million Award in Contract Dispute

Singapore Telecommunications Ltd., Southeast Asia’s largest phone company, won a S$1.7 million ($1.3 million) award in a cable dispute with a contractor.

Sin Lian Heng Construction Pte sued SingTel in 2006 over unpaid bills for work on the phone company’s cable ducting network. SingTel countersued, claiming Sin Lian Heng breached the contract and wrongfully kept the cables.

Justice Lee Seiu Kin dismissed Sin Lian Heng’s claim and ruled in favor of SingTel in an Aug. 2 decision released on Aug. 6.

SingTel’s award takes into account a S$2 million settlement with Sin Lian Heng for the unpaid bills, Lee said. Both companies have appealed the ruling, Lee said.

The cases are Sin Lian Heng Construction Pte v. Singapore Telecommunications Ltd. S525/2006 and Singapore Telecommunications Ltd. v. Sin Lian Heng Construction Pte S532/2006 in the Singapore High Court.

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Court Filings

Highland Lawsuit Against Lyondell Most Popular on Bloomberg

Highland Capital Management LP’s lawsuit against LyondellBasell Industries NV and the securities unit of UBS AG for breaching a contract involving a $150 million loan to Lyondell was the most-read litigation docket on the Bloomberg Law system last week.

In the suit, filed July 28 in Manhattan state Supreme Court, Highland claims it agreed to fund $150 million of a $1 billion term loan as part of Lyondell’s bankruptcy reorganization. Lyondell accepted the offer, according to the suit. UBS Securities LLC, Lyondell’s New York agent arranging the term loan facility, interfered to punish Highland over an unrelated dispute, the suit says.

“UBS, to further its own personal unrelated dispute with Highland, refused to allocate any of the term loan to Highland, and caused Lyondell to breach its contract with Highland,” the suit says. “Such raw abuses of power disrupt the commercial workings of the market and should be stopped and punished.”

The case is Highland Capital v. LyondellBasell, 651112/2010, New York state Supreme Court (Manhattan).

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Court News

Kagan Sworn In by Roberts, Becomes 112th Supreme Court Justice

Elena Kagan was sworn in as the 112th U.S. Supreme Court justice and its fourth woman ever, taking the oath of office at the high court two days after the Senate confirmed her.

Kagan, 50, the former dean of Harvard Law School, pledged to “do equal right to the poor and to the rich” as she took the second of two required oaths from Chief Justice John Roberts, who congratulated her and welcomed her to the court.

“We look forward to serving with you in our common calling,” Roberts said Aug. 7 after administering the oath. A formal investiture will take place on Oct. 1, three days before the justices begin their next term.

The U.S. Senate voted 63-37 to approve her appointment by President Barack Obama after a summer of debate over the role of judges and the sharply divided court under Roberts. Only five Republicans supported her; one Democrat, Ben Nelson of Nebraska, opposed her.

Kagan succeeds Justice John Paul Stevens, who retired after 35 years. She is likely to take his place as one of the four justices who take more liberal positions on such issues as abortion, gun rights and campaign finance.

With Kagan, the nine-member court will have three women for the first time. She joins Justices Sonia Sotomayor, Obama’s first appointee, and Ruth Bader Ginsburg.

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

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