By Jonathan Stempel

(Reuters) – A federal judge on Thursday said BP Plc must indemnify Transocean Ltd for some compensatory damage claims over the 2010 Gulf of Mexico oil spill.

U.S. District Judge Carl Barbier, who oversees multistate litigation over the spill, agreed with Transocean that the Swiss driller was not responsible for compensatory damage claims raised by third parties for oil spilled below the ocean surface.

He also ruled, however, that London-based BP need not indemnify Transocean for punitive damages, or civil penalties imposed by the U.S. government under the federal Clean Water Act.

Thursday’s decision reduces the potential liability Transocean faces over the April 20, 2010 Deepwater Horizon drilling rig explosion that caused 11 deaths and the largest offshore oil spill in U.S. history.

Transocean owned the rig, while BP owned a majority of the Macondo well whose blowout led to the spill.

Shares of Transocean rose 7.7 percent in after-hours trading, and BP shares fell 0.6 percent.

By Jonathan Stempel and Roberta Rampton

(Reuters) – Ener1 Inc (HEVV.PK: Quote, Profile, Research, Stock Buzz), which received a $118.5 million Department of Energy grant to make lithium-ion and other batteries for electric cars, filed for bankruptcy protection amid heavy competition and after the demise of a large customer.

The Chapter 11 filing with the U.S. bankruptcy court in Manhattan came 4-1/2 months after Solyndra LLC, a solar panel company that obtained $535 million of government loan guarantees, filed for protection from its own creditors.

It comes amid persistent criticism of President Barack Obama from Republican lawmakers about whether his administration is properly assessing “clean energy” companies before authorizing government support.

The Energy Department had in 2009 awarded the $118.5 million grant to Ener1′s EnerDel unit, as part of a government stimulus package to bolster the U.S. electric car industry.

U.S. Vice President Joe Biden hailed the grant in a visit to an Ener1 plant in Indiana exactly one year prior to the bankruptcy filing, on January 26, 2011. EnerDel has used about $55 million of the grant through September 23, a court filing shows.

Alex Sorokin, Ener1′s interim chief executive, in a court filing said his company faced “intense competition” from other battery makers such as Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz), as well as Chinese and Korean rivals that have lower manufacturing costs.

By Jonathan Stempel

(Reuters) – A U.S. appeals court threw out an injunction that Chevron Corp had won to block enforcement of an $18 billion judgment in Ecuador for polluting the Amazon jungle and damaging the health of residents.

The 2nd U.S. Circuit Court of Appeals in New York said Chevron acted prematurely in seeking to block enforcement of the judgment worldwide, given that the residents of Ecuador’s Lago Agrio region had not yet sought to enforce it.

Chevron considers the Ecuadorean judgment fraudulent and is appealing it separately.

Thursday’s decision overturned a March 2011 injunction issued by U.S. District Judge Lewis Kaplan in Manhattan to block enforcement of the judgment, imposed by an Ecuadorean court in February 2011. The appellate court also directed Kaplan to dismiss Chevron’s complaint.

Chevron could challenge the judgment’s validity “only defensively, in response to attempted enforcement,” which the Ecuadorean plaintiffs “have not yet undertaken anywhere, and might never undertake in New York,” Judge Gerard Lynch wrote for a unanimous three-judge panel of the 2nd Circuit.

In a statement, Chevron said the decision “may change the order in which courts address the fraud being perpetrated in the Lago Agrio case, but it will not affect the ultimate outcome. In fact, the 2nd Circuit acknowledges the extensive evidence of fraud.”

By Jonathan Stempel

(Reuters) – Standard & Poor’s has been sued by Illinois’ attorney general, who accused it of fueling the nation’s housing and financial crises by assigning inflated credit ratings to risky mortgage-backed securities.

Attorney General Lisa Madigan said the McGraw-Hill Cos unit, in a drive to boost market share, committed fraud and compromised its independence by issuing tainted, often “AAA” ratings to curry favor with Wall Street banks that created the securities.

“S&P was making hundreds of millions of dollars a year rating these deals,” Madigan said in a telephone interview. “Without the rating agencies as enablers, none of these securities would have been able to be purchased by many investors.”

Catherine Mathis, an S&P spokeswoman, declined immediate comment, having yet to review the complaint.

The lawsuit accuses S&P of violating state consumer fraud and deceptive trade practices laws. It seeks to recover profits derived from alleged inflated ratings, plus a $50,000 civil fine for each violation.

S&P and its main rivals, Moody’s Corp’s Moody’s Investors Service and Fimalac SA’s Fitch Ratings, have long faced investor and regulatory criticism over their ratings for structured securities that later proved toxic.

By Jonathan Stempel and Liana B. Baker

(Reuters) – Eastman Kodak Co, the photography icon that invented the hand-held camera, has filed for bankruptcy protection and plans to shrink significantly, capping a prolonged plunge for one of America’s best-known companies.

The Chapter 11 filing makes Kodak one of the biggest corporate casualties of the digital age, after it failed to quickly embrace more modern technologies such as the digital camera — ironically, a product it invented.

Kodak once dominated its industry, and its film was the subject of a popular 1973 song, “Kodachrome,” by Paul Simon.

The bankruptcy may give Kodak, which traces its roots to 1880, the ability to find buyers for some of its 1,100 digital patents, a major portion of its value. Kodak now employs 17,000 people worldwide, down from 63,900 just nine years ago.

“It is a very sad day even though we had anticipated it,” said Shannon Cross, an analyst at Cross Research who has had a “sell” rating on the company since 2001. “If it emerges, it will be a much smaller entity.”

According to papers filed with the U.S. bankruptcy court in Manhattan, Kodak had about $5.1 billion of assets and $6.75 billion of liabilities at the end of September.

By Jonathan Stempel

(Reuters) – Large U.S. companies are facing fewer shareholder securities fraud lawsuits than at any other time in the last decade, a trend that may persist as fallout from the 2008 financial crisis recedes.

Just 3.2 percent of all companies in the Standard & Poor’s 500 in 2011 faced new securities fraud lawsuits seeking class-action status, an annual study of litigation released on Thursday shows. That’s down from 5.4 percent in 2010, and 9.2 percent as recently as 2008.

The falloff was even more dramatic among S&P 500 financial services companies, where the percentage sued fell to 1.2 percent in 2011 from 31.2 percent in 2008, according to the study, by Stanford Law School and Cornerstone Research in Boston.

Plaintiffs did pursue more lawsuits in 2011, seeking 188 federal securities class-actions, up from 176 a year earlier.

But the pace of filings actually fell after discounting a surge in the number of cases targeting Chinese reverse mergers — and even that trend is now abating.

Corporate mergers, meanwhile, were the basis for 23 percent of the new lawsuits, the same as in 2010 and higher than in previous years. These cases are often filed against acquisition targets and claim that takeover prices are too low.

Jan 18 (Reuters) – BankAtlantic Bancorp Inc (BBX.N: Quote, Profile, Research), one of Florida’s largest banks, and its chief executive, Alan Levan, were charged by the U.S. Securities and Exchange Commission with defrauding investors in 2007 as problems mounted in a commercial real estate portfolio tied to residential housing.

The SEC said BankAtlantic and Levan made misleading statements in public filings and earnings calls in order to hide deterioration in the portfolio, and then committed accounting fraud by improperly recording on its books various loans they were trying to sell from the portfolio.

“This is exactly the type of information that is important to investors, and corporate executives who fail to make that required disclosure will face severe consequences,” SEC enforcement chief Robert Khuzami said in a statement.

The lawsuit seeks financial penalties, as well as an officer and director bar against Levan. BankAtlantic last year agreed to sell its primary banking operations to BB&T Corp (BBT.N: Quote, Profile, Research).

(Reporting By Jonathan Stempel)

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By Jonathan Stempel

(Reuters) – A federal judge refused on Thursday to throw out a lawsuit accusing General Electric Co and its chief executive of misleading investors about the conglomerate’s financial health and exposure to risky debt during the 2008 financial crisis.

The decision by District Judge Richard Holwell in Manhattan keeps alive litigation seeking to hold the company responsible for investor losses during a six-month period when its stock price fell to about $10 from about $26, causing its market value to tumble by more than $150 billion.

Investors claimed that GE withheld information regarding its health and the health of its GE Capital finance arm, including exposures to subprime and other low-quality loans. They also said GE misleadingly touted itself as being safer than rivals, despite the effects of the financial crisis.

Holwell also let stand some claims accusing bank underwriters of omitting statements from offering documents for a $12.2 billion GE stock offering in October 2008. He dismissed several other claims, and did not rule on the case’s merits.

A GE spokesman and lawyers for the investors did not immediately respond to requests for comment. Antonio Yanez, a lawyer for the banks, declined to comment.

Holwell said investors led by the State Universities Retirement System of Illinois adequately alleged that GE made material misrepresentations during the crisis about its access to commercial paper and ability to maintain its dividend.

By Jonathan Stempel

(Reuters) – A group of chief executives at more than 200 large U.S. companies urged a federal appeals court to undo a judge’s controversial decision making it harder for companies to settle Securities and Exchange Commission fraud cases.

The Business Roundtable said companies face “protracted and expensive litigation” if the “novel, and potentially dangerous” reasoning used by District Judge Jed Rakoff to scuttle an SEC fraud settlement with Citigroup Inc is not thrown out.

In that November 28 decision, the Manhattan judge rejected the SEC’s long-standing practice of not requiring settling companies to admit or deny its charges.

The regulator had accused Citigroup of selling $1 billion of risky mortgage securities without telling investors that it was simultaneously betting against that debt.

But Rakoff said that by not forcing Citigroup to address whether it did anything wrong, the SEC left him no way to know whether the $285 million settlement was fair.

In a court filing on Thursday, lawyers for the CEOs told the 2nd U.S. Circuit Court of Appeals that Rakoff’s decision improperly adds legal burdens to companies already facing increased regulation, including the recent Dodd-Frank financial reforms and the new Consumer Financial Protection Bureau.

By Jonathan Stempel

(Reuters) – American Honda Motor Co won a legal victory as a divided U.S. appeals court on Thursday said a nationwide lawsuit over a brake system used in some Acura RL vehicles should not have been certified as a class-action.

The 2-1 decision by the 9th U.S. Circuit Court of Appeals in Pasadena, California, is a fresh setback for consumers, who have seen their ability to sue collectively curtailed after a U.S. Supreme Court ruling last June in favor of Wal-Mart Stores Inc that narrowed class-action litigation.

The 9th Circuit said a Los Angeles district court judge erred in finding that California’s tough consumer protection laws should apply to a nationwide class of consumers who bought or leased Acura RLs equipped with the optional Collision Mitigation Braking System from August 17, 2005 to December 16, 2008.

It also said the lower court wrongly found that consumers could have relied on advertising by American Honda about the system, part of a $4,000 technology package.

Lawyers for the roughly 2,000 plaintiffs did not immediately respond to requests for comment. American Honda, which is part of Japan’s Honda Motor Co Ltd, had no immediate comment.

The brake system was designed to warn Acura RL drivers with an alarm and flashing indicator that a crash may be imminent, and tighten seat belts and apply brakes automatically if a frontal crash appeared unavoidable.