Chesapeake Energy, McClendon under U.S. SEC probe

Thu May 3, 2012 7:05pm EDT

Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation Aubrey McClendon talks on his mobile phone as he walks through the French Quarter in New Orleans, Louisiana in this March 26, 2012 file photo. REUTERS/Sean Gardner/Files

Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation Aubrey McClendon talks on his mobile phone as he walks through the French Quarter in New Orleans, Louisiana in this March 26, 2012 file photo.

Credit: Reuters/Sean Gardner/Files

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(Reuters) - Chesapeake Energy Corp said on Thursday the company and Chief Executive Aubrey McClendon are under scrutiny by the U.S. Securities and Exchange Commission as part of an informal inquiry.

Reuters first reported last week that regulators in the agency's Fort Worth office were looking into a controversial program that grants McClendon a share in each of the wells Chesapeake drills.

Chesapeake did not specify what regulators were examining but said the company and McClendon were asked to retain certain documents, Chesapeake said in a statement.

News of the SEC probe followed the Reuters report that McClendon had borrowed as much as $1.1 billion against his minority share of company wells granted to him under a corporate perk called the Founders Well Participation Program.

The loans were previously undisclosed to shareholders and McClendon's biggest lender, EIG Global Energy Partners, is also a big financier for Chesapeake -- a situation that raises potential conflicts, analysts and academics have said.

On Wednesday, a Reuters investigation found that McClendon ran a lucrative $200 million hedge fund on the side that traded in the same commodities Chesapeake produces.

Chesapeake and McClendon are cooperating with the SEC and the regulators. The SEC noted in its request, which Chesapeake received on Wednesday, that its inquiry does not mean a violation of security laws has occurred, Chesapeake said.

(Reporting by Anna Driver; Editing by Dale Hudson, Bernard Orr)

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Comments (1)
JamVee wrote:
A perfect example of taking a company “public”, to get the shareholder’s money, but maintaining total control as if it were still a Sole Proprietorship, and “personal piggy bank”. It just doesn’t work that way.

May 03, 2012 8:07pm EDT  --  Report as abuse
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