Chesapeake Energy reveals SEC probe into CEO perks

AP News
Posted: Mar 01, 2013 12:57 PM

OKLAHOMA CITY (AP) — Chesapeake Energy Corp. and outgoing CEO Aubrey McClendon are being investigated by the Securities and Exchange Commission about a perk that allows McClendon to invest personally in the company's oil and gas wells.

Chesapeake revealed the investigation Friday in its annual 10-K report filed with the SEC.

According to the report, the SEC opened an investigation in December, stepping up what had begun as an informal inquiry started in May.

The probe is looking into a deal that McClendon, who founded Chesapeake in 1989, has long had with the company that allows him to invest personally in the oil and gas wells the company drills.

McClendon financed his stakes in the wells with loans secured by his interest in the wells. Last spring Reuters reported that McClendon received loans of $1.4 billion from an investment firm called EIG Global Energy Partners that was negotiating a separate oil and gas deal with Chesapeake.

After that surfaced, Chesapeake's board launched its own investigation of the financing deals. The probe sought to discover if McClendon, who was then chairman and CEO of Chesapeake, received a special deal from EIG and in return sold the company's assets at lower-than-market value. The probe also looked further back into other similar deals McClendon may have struck.

Last month the company said that it found the deals did not benefit McClendon improperly or cost the company more.

McClendon was stripped of his role as chairman in May. In January, Chesapeake announced McClendon would leave the company April 1 amid philosophical differences.

Chesapeake shares fell 29 cents, or 1.4 percent, to $19.87 in afternoon trading.