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Chesapeake Energy Confirms SEC 'Informal Inquiry'
YOUNGSTOWN, Ohio – The Securities and Exchange Commission has ordered Chesapeake Energy Corp. and its CEO, Aubrey K McClendon, to retain certain documents as the regulatory agency begins what the company terms “an informal inquiry” into a program that enables McClendon to own a share in each of the wells Chesapeake drills.
In a news release confirming the probe, Chesapeake said, “The SEC noted in its request, which was received [May 2], that its inquiry should not be construed as an indication that any violation of the federal securities laws has occurred. The company and Mr. McClendon intend to cooperate with the SEC in responding to its inquiry.”
In the last two weeks, the Reuters news agency has published a series of investigative reports that raised numerous questions regarding conflicts of interest, most recently reporting that McClendon operated a $200 million hedge fund “on the side that traded in the same commodities Chesapeake produces.”
Chesapeake is the nation’s second-largest producer of natural gas, a Top 15 producer of oil and natural gas liquids and the most active driller of new wells in the United States. It is the largest leaseholder in eastern Ohio’s Utica shale play, and controls nearly all the drilling rights in Mahoning, Columbiana and Carroll counties.
On Wednesday Reuters reporters that U.S. Sen. Bill Nelson is asking the U.S. Justice Department “to investigate Chesapeake for potential frau and price manipulation.”
McClendon borrowed more than $1.1 billion to buy his stakes in the company’s wells, which was not disclosed to shareholders until after Reuters published its first investigative report. A number of shareholders lawsuits followed.
On Tuesday McClendon agreed to stop down as CEO of Chesapeake; he remains CEO.
CLICK HERE to read Reuters series of investigative reports.
Published by The Business Journal, Youngstown, Ohio.