NEW YORK (CNNMoney.com) -- The nation's third-largest public pension fund on Wednesday initiated a class action suit against BP for losses incurred due to the oil spill in the Gulf of Mexico.
The $132.6 billion New York State Common Retirement Fund is seeking "lead plaintiff" status in the class-action suit and looking to recover damages sustained from the decline in shareholder value after the April 20 Deepwater Horizon oil rig explosion that killed 11 workers.
New York State comptroller Thomas P. DiNapoli, trustee of the fund, said it held 19 million BP (BP) shares at the time of the explosion. Since then, the beleaguered oil giant's stock price has fallen 50%, which translates into a loss of up to $574.6 million in value to the fund if it held on to the shares.
"BP misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill, and we're going to hold it accountable," said DiNapoli in a prepared statement.
Robert Whalen, a spokesman for DiNapoli, said the fund would pursue the company under the securities fraud provision of the law.
A BP spokesman said Wednesday the company does not comment on current or potential litigation.
New York isn't the only pension fund impacted by the BP debacle.
The California Public Employees' Retirement System (CalPERS), the United States' largest public pension fund, owned 58.2 million BP shares valued at $585.7 million on April 20, according to Clark McKinley, a fund spokesman. As of June 9, the fund owned 60.1 million shares worth $345.3 million, a mere fraction of CalPERS' $205.2 billion total market value.
"We are large enough to sustain reversals of individual portfolio companies. However, we certainly are concerned about the loss of BP share value," said McKinley, who would not say whether the fund intended to file suit against the company.
Efforts to reach the California State Teachers' Retirement System (CalSTRS), the second largest public pension fund, were not immediately successful.
In recent trading sessions, BP's stock price has hovered above a new 52-week low set on June 9, buoyed by the company's decision to suspend its dividend for the remainder of the year and the removal of CEO Tony Hayward from day-to-day leadership of the cleanup operations.
Despite recent downgrades by credit rating agencies, many analysts have called the stock a 'buy', saying its financial resources outweigh the potential cost of the oil spill.
But others are less enthusiastic.
"My concern with the stock is the uncertainty around the future liabilities from the Gulf of Mexico spill," said Allan Boomer, vice president of Fiduciary Management Group.
Last week, BP agreed to set aside $20 billion in an escrow account for spill-related costs, a sum that does not cover potential fees and penalties that could be imposed by the federal government. On Monday, the company said it has so far spent $2 billion to clean up the Gulf spill.
Boomer said that price tag is likely to soar amid mounting costs and political uncertainty, which could put downward pressure on the stock and exacerbate the problems facing state pension funds.
Berkshire Hathaway CEO Warren Buffett released his 50th annual letter to shareholders. The Oracle of Omaha thinks the next 50 years will be great and knows who will replace him. More
Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More
With the death of Leonard Nimoy, the actor who played Star Trek's Spock, we remember his character's legacy: The technology we use every day. More
A social media frenzy about the color of a dress is bringing fame and fortune for one small British fashion company. More