SEC Steps Up Scrutiny of Chesapeake, McClendon

Chesapeake Energy (NYSE: CHK  ) revealed today in a regulatory filingthat the SEC is stepping up its previously "informal inquiry" into the company and outgoing CEO Aubrey McClendon's actions regarding a controversial benefit McClendon enjoyed called the Founder Well Participation Program (FWPP).

According to Chesapeake's 10-K, "On December 21, 2012, the SEC's Fort Worth Regional Office advised Chesapeake that its inquiry is continuing as an investigation and it has issued subpoenas for information and testimony." Chesapeake and McClendon are providing information to the SEC, the company said in its filing, and the company "is also responding to related inquiries from other governmental and regulatory agencies and self-regulatory organizations."

The FWPP provision in McClendon's employment agreement has allowed him to acquire working interests in virtually all of Chesapeake's natural gas and oil properties. Shareholders have initiated lawsuits against Chesapeake related to the FWPP and other practices.

The revelation of the stepped-up SEC investigation comes nine days after the board of directors announced the conclusion of its review into the FWPP matter. According to the 10-K, "no intentional misconduct by Mr. McClendon or any of the Company's management was found by the Board concerning these relationships and/or these transactions and issues."

The risk section of Chesapeake's 10-K goes on to explain that the company's legal expenses have increased as a result of these issues, warning that "such expenses in the future may be significant." It goes on to say that "attention to these matters by members of our senior management has been required, reducing the time they have available to devote to managing the Company's business."

McClendon is set to leave his post on April 1.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2288380, ~/Articles/ArticleHandler.aspx, 9/27/2016 10:16:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
CHK $6.23 Down -0.39 -5.89%
Chesapeake Energy CAPS Rating: ***