US District Court Chief Judge Charles Kocoras preliminarily approved the settlement in a class action suit involving more than 10,000 current and former BP employees, BNA reported.
According to settlement documents, the class represents approximately 40% of the losses incurred through the risky Enron investments. The pact covers a suit against BP North America and a second focusing on UBS which served as investment manager for BP’s retirement plans. UBS is set to pay the plaintiffs $5.49 million while BP will provide another $1.45 million to the overall settlement.
According to court documents, BP operated a Money Market Fund investment option under its BP Employee Savings Plan. The savings plan served as a 401(k) plan and featured 20 investment options. The Money Market Fund was the only “short-term option” and was characterized as the “safest” investment option under the plan.
Despite such representations, the plaintiffs contended that the defendants invested in risky instruments. The suit specifically noted that in October 2001, the defendants imprudently invested Money Market Fund assets in risky debt instruments offered by Enron. Those investments became essentially worthless in a matter of weeks, leading to significant losses for the Money Market Fund. In total, the plaintiffs estimated a principal loss to the fund of $17 million.
In settling the litigation, both BP and UBS denied any responsibility for losses incurred by the Money Market Fund.
The case is Nelson v. BP Corporation North America, N.D. Ill., No. 04 C 7660, 3/14/06.