A former BP employee who was a coordinator during the 2010 oil spill in the Gulf of Mexico has agreed to settle federal charges of using confidential information on the seriousness of the spill to profit illegally from trading in BP stock.
The Securities and Exchange Commission announced the settlement of civil insider-trading charges with Keith Seilhan, saying he agreed to pay $224,118. Seilhan neither admitted nor denied the SEC's allegations but agreed to refrain from future violations of securities laws.
The agency says Seilhan was a crisis manager in BP's incident command center in Houma, Louisiana, and coordinated the initial cleanup operations after the spill that occurred April 20, 2010.
The SEC says he received private company information on the magnitude of the disaster, such as estimates of oil flow.
The explosion on the BP-operated drilling rig Deepwater Horizon four years ago killed 11 workers about 50 miles off the Louisiana coast and set off the nation's worst offshore oil disaster.
Seilhan, 47, who lives in Tomball, Texas, was a 20-year employee of the British oil company. He left BP in January 2011.
Seilhan settled the case because he "wants to avoid further distraction and protracted litigation," his attorney, Mary McNamara, said in a statement. "Mr. Seilhan is widely respected for his work helping to lead the cleanup and containment efforts in the Gulf of Mexico in 2010."
Under terms of the settlement, which must be approved by a federal judge in Louisiana, Seilhan agreed to pay a $105,409 penalty and an additional $105,409 in restitution plus $13,300 in interest.
The SEC alleged in a civil lawsuit that while he had the confidential information, Seilhan sold his family's entire $1 million portfolio of BP stock on April 29 and 30 in 2010. He made profits and avoided losses totaling about $100,000 as BP stock dropped, the SEC said.
"Corporate insiders must not misuse the material, nonpublic information they receive while responding to unique or disastrous corporate events, even where they stand to suffer losses as a consequence of those events," Daniel Hawke, head of the SEC enforcement division's market abuse unit, said in a statement.
BP shares, which closed at $60.48 on April 20, the day of the explosion, plummeted as low as $27.02 over the following weeks. They closed at $38.92 on July 15, the day BP announced it had successfully capped the well and oil was no longer leaking into the Gulf.
The SEC said Seilhan also traded BP stock on July 21, 2010.
By April 29, BP had estimated in filings to the SEC that the oil was flowing at up to 5,000 barrels a day. That estimate was far less than the actual rate, which was later estimated at 52,700 to 62,200 barrels a day, according to the SEC. The agency alleged that Seilhan had information indicating that the size of the spill and BP's potential losses and liability were likely to be much larger than what the company had publicly reported.
BP agreed to pay $4.5 billion in 2012 in a settlement with the Justice Department and to plead guilty to felony counts related to the deaths of the 11 workers and company executives' statements to Congress. In addition, BP estimates that since May 2010, it has paid out some $11 billion so far in claims to individuals and businesses over economic losses and damages.