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.

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