Special Report: Inside Chesapeake, CEO ran $200 million hedge fund

“Advance knowledge of Chesapeake’s activities could be perceived as having insight into the movement of commodities prices, which certainly raises conflict-of-interest issues as well as ethical issues about the ability to enrich himself on non-public information,” said Tim Rezvan, oil and gas industry analyst at Sterne Agee in New York.

This is not a “Hedge Fund”. It’s an “Insider Trading Club”.

I’d like to see a list of the club’s members and how much money they have made.

He opened the fund to outside investors and charged them 2 and 20. That makes it a hedge fund.

What a joke. If every board member who had knowledge of this isn’t put in prison there is a huge problem with our system. As an a Registered Investment Advisor I have to disclose as a potential conflict of interest doing tax returns for clients. This guy can run a hedge fund that trades in the same markets as the ones he has the power to move. Where is the symetry SEC???? Chesapeake should be dismantled and all involved should be in prison including the investors in the hedge fund.

Shine a light anywhere in the financial services industry and this is what you get.

I’m sure this fund is small compared to the ones other people are running… I think this guy just made someone mad and they are tossing him under the bus. No doubt, MANY other CEO’s do these same things.

“Shine a light anywhere in the financial services industry and this is what you get.”

Hehe, yep – the roaches scatter!

There seems to be an underlying culture at Chesapeake with the board that anything Aubrey did was okay and they went along with it. The fact that they gave him a compensation plan of 112 million bucks after their stock was done over 80% is prima facie proof that this board is out of control and should be held accountable by the stockholders. I believe the SEC will eventually step in and make these guys accountable.

The notion that left to their own devices, all CEO’s will do the right thing and pursue an ethical course of action is again dashed upon the rocks. THIS is why we need stringent regulation and over-sight on Wall Street… something the GOP is STILL blocking 4 years after the last meltdown.

This is nothing short of insider trading and personal. I want this thief in jail and not paying the SEC to get off with a slap on the hand like Grubman. In fact it might be a good time to look at the board of directors and see what their interests were.

Stop trying to punish hard work! Isn’t it obvious that this guy made his millions upon millions by simply working 1000x harder than the average workers in his company?

It seems Reuters has an axe to grind with Chesapeake and/or Aubrey McClendon.

What’s with the perpertual hatchet job? How long has Reuters known about these things? Did someone at Reuters get their panties in a wad because someone at Chesapeake hurt their feelings?

I imagine if you examined other companies you would find CEOs engaging in the same types of activities as Aubrey McClendon.

I wonder how many other stories Reuters is sitting on waiting for the proverbial rainy day.

We should throw them all in jail quickly before they get a chance to run into the Chinese Embassy asking for asylum.

I love how this Ward fellow expects us to believe that no decisions were made using info from Chesapeake. Does he take the world for fools. The sad part is he’ll be right when the SEC decides to do nothing.

People like this should be taken and dropped off in the slums of Manila penniless and left to fend for themselves. If they’re so damn smart, they should be able to come out of that just fine.

What’s awesome is that Chesapeake is in the middle of finding out they are being run by a John Corzine wanna-be….. and they KEEP him on as CEO. Good luck with all that, shareholders. Secret hedge fund and personal loans to himself with company money are usually a bad sign. But…. you never know. Maybe he wasn’t embezzling. He just has a million-dollar-a-day cocaine habit. And he’s going to quit any day now, so all is good :)

Ha Ha. Should have hit sell on that dog turd two years ago.

The hedge fund has the same name as the right wing propaganda factory, which somehow seems appropriate.

@Alkaline – All he has to do is say he is sorry and that he plans to go to rehab for his addiction which caused him to act in such ill-gotten ways, then become a born-again christian and everything is fine right? Works great in politics ;)

> “There is no evidence that McClendon or Ward used inside knowledge gleaned from Chesapeake in their hedge fund trading.”

It would be a wonder if he didn’t. Does McClendon have two brains, isolated from each other? Or does Ward???

TheMrNiceGuy wrote:
> “It seems Reuters has an axe to grind with Chesapeake and/or Aubrey McClendon.”

Public interest. It seems to me like Aubrey McClendon has an axe to grind with Aubrey McClendon… Otherwise, why would have have done all this seriously dodgy stuff? He’s clearly set himself up for this, and deserves much more than what he’s getting.

@anarcurt: R U selling your astroturf services to paying plutocrats? You ought to be…

As represented, it is illegal activity and shareholder fraud. He should be forced to disgorge the ill gotten gains, as should all participants of his “hedge fund” (you can call it a “sofa” and it does not change its deceptive and thieving nature).

If this is “legal” (under the Commerce Clause perhaps???) then it should not be. If this is as represented, and is “legal”, that merely demonstrates the deep, deep corruption in the American system, not any kind of legality. It would mean a number of judges and legislators should be deposed and imprisoned. That is the problem with corruption — the public’s “guardians” and “representatives” cooperate with public enemies to swindle the People. And Government officials, mostly corrupt themselves, do not punish their fellow crooks for fear of being punished themselves.

Our system is so thoroughly crooked that it can probably never be adequately reformed. We are a long way past the Teapot Dome in sophistication and reach of corrupt practices. We do not need to fear Al Qaeeda, we need to fear our own power elite.

@usagadfly – agreed.

Just for arguments sake: do you think it may be a bit too utopian to think as humans we can ever achieve a corruption free system? I do; no system is perfect but we can do FAR better than what we have now

Is anyone surprised? What is sad is everyone knows that this kind of stuff is going on all the time. And the republicans want to deregulate and cut funds to the already ineffective SEC. I will be surprised if this guy spends even a night in the tank, unless he gets caught for drunk driving of course.

“There is no evidence that McClendon or Ward used inside knowledge gleaned from Chesapeake in their hedge fund trading.”

Of course not. No insider trading at all. It’s probably just a coincidence that McClendon’s hedge fund was set up for natural gas supply bets and Chesapeake’s product is…. natural gas. And there’s probably a good reason he never disclosed the existence of this hedge fund to the SEC or to Chesapeake shareholders. Maybe he just…. forgot?

Good times. Wall Street will police itself. What is it the GOP likes to say: “There is no manipulation in the energy market. The problem is Obama. We just need the XL pipeline.” I’m guessing Obama drove poor McClendon to these desperate measures (in 2004-2008).

Meanwhile jails and/or courts are overflowing with folks for stealing bread and whatnot for their starving kids. This country has officially lost all credibility.

This sounds and smells like Bernie Ebbers and World Comm. CNBC paraded Bernie on TV… He was innocent… What $10B down the drain..

Cramer just had Aubrey on telling us how great a company Chesapeake was… I say run for the door if you haven’t all ready!

Good detective work. 99.9 percent of traders use insider information to some extent.

The ones making all the money are easy pickings for finding evidence of criminal activity. There is no other way they could make the profits they do without this method.

Problem is – in most cases the detective work will take you back to Capitol Hill and then you will be shut down pretty quick.

@matthewslyman: Complete sarcasm intended to play on the absurd right-wing notion that the people who make the most money earned it purely through working harder than the rest of us. I thought the second sentence made this clear.

What amazes me is how anyone can think it’s the GOP’s fault. Both parties are as corrupt as this man is and no amount of politic bickering will change that. Our system is broken and until we throw out all the bums this will continue to happen. RE-ELECT NO ONE!!!

This guy needs to have an exploratory well drilled in his head!

This is the type of person Mitt Romney will try and give a tax break too if elected, after all they are the ‘job creators’ right? One would have to be an idiot or mega-rich to vote for that guy.

And the band played on…

Whoa whoa whoa. Hey guys. We should “protect the job creators”. LOL

Aubrey McClendon just had an undisclosed part time job at a relatively small $200 million hedge fund, and there are maybe few good reasons for that. Probably, to please Chesapeake share holders, he did not ask for any big bonuses like other CEO’s; it will be fair if he earns his bonus … at some hedge fund, for example. The other reason is he just borrowed 1.1 billion, because he wanted to create more jobs in US: for instance, few more hedge funds. Soon he will pay about 10 million in settlement, so justice will be there, and happy end. His part time job should help him to get some good gifts for his wife (mother’s day is coming ) … Compare to war in Iraq, Aubrey McClendon is simply innocent. Sorry, for little sarcasm.

Just get out of the way, and financial behemoths will properly regulate themselves. Yup, and steal the remaining 10% of the wealth they don’t already have.

Anybody seen my middle class?

I know I left them around here somewhere…

Republican solution to Wall Street cancer: elect Wall Street to the White House.

So when a natural gas drilling company executive embezzles shareholder money and runs a hedge scam on the side in order to bet against the company…. is that called a racket or is it a ‘fracket.’

Good times. I think we have a new financial term.

Tom Ward and Aubrey McClendon are two peas in a pod whose association goes back to when they were landmen. The news is just the tip of the iceberg.

Turkeys like this guy cause untold damage to the lives of hardworking, honest people. And in return for their actions they get fired at worst, but more commonly get a bonus.
Not to worry though, Obama is a champion of the little guy, he’ll make this right.
Oh, hang on, didn’t banks and big corporate grow 20% at the expense of the litte guy under his tenure?
Nevermind, every man for himself, or in other words, Wall street rules.

Everyone here feels real good at understanding the real enemies of America, very correctly.
But I haven’t seen anyone here suggest what to do about it.
It is like we have turned this into another soap opera, and we seem to enjoy it too.
Are we all handicapped or what?

GET OUT THERE AND DO SOMETHING…EVEN JOIN THOSE FILTHY NO GOOD OWS’S, AT LEAST THEY ARE DOING SOMETHING….

GMavros, have you ever heard of smartphones? How do you know we’re not occupying Wall Street right now as we type? Actually, I’m occupying a tire shop in Boise Idaho as we speak, drinking their shiddy coffee while my truck gets new tires put on. But hey that’s a start. I’m stealing some of their non-dairy creamer, too.

Sent from my girl phone.

So McClendon has a “sorry.” I’m sorry I used the company for my own gain. Blah, blah, blah. Greed for the few! This is the kind of capitalism that Romney wants. Back to the 1890s.

“We did not use any proprietary knowledge of (Chesapeake) trades to make our own individual decisions,” Ward said.

Peter Cirino, who helped trade natural gas for the hedge fund, also said he knew of no discussions about what Chesapeake was doing in energy markets: “They were much too smart as individuals,” Cirino said of McClendon and Ward. “They would be able to manage that conflict there, if there was one.”

Priceless.

Reuters, this whole series is Pulitzer material.

Throw the bum in prison, confiscate the money, drain him dry. Ripping off a bunch of people for a small chunk of money each doesn’t make it less bad.

I’m unsure exactly how Aubrey Mclendon has ripped anyone off? By borrowing money to pay his obligations to a Founders Well Program that was approved by shareholders? Because he invested in a hedgefund who made great returns at the same time CHK was making great returns? CHK rose from $12.40/share to $65/share. He clearly wasn’t betting against CHK. If anything he’s shown that he is extremely long on gas up to the point he’s lost a significant amount of wealth.

Above comments prove that the left is out for the successful businesman.