March 16, 2020 / 1:01 PM / 18 days ago

Oilfield firm ProPetro ousts CEO, reveals lack of loan disclosures

(Reuters) - Oilfield services firm ProPetro Holding Corp on Monday ousted Chief Executive Dale Redman, and said he violated its insider trading policies over shares pledged for personal loans.

ProPetro shares tumbled more than 5% on Monday morning to $1.83, far below its 52-week high of $25.38. Reuters disclosed last year it was under investigation by the U.S. Securities and Exchange Commission (SEC).

The company admitted it issued inaccurate information to investors on Redman’s stock holdings.

Board Chairman Phillip Gobe will replace Redman, whom the company said had resigned.

The shakeup was the latest in a series of top departures since last year when the company disclosed it had issued inaccurate information about an equipment contract and was reviewing accounting controls and public disclosures.

Redman, a co-founder of the shale fracking provider, pledged shares in 2017 and 2018 for personal loans without disclosing it to the board. The board previously said its review had found multiple material weaknesses in financing controls.

Its insider trading policies prohibit “pledging the Company’s securities as collateral to secure loans,” the company said.

The former CEO “engaged in other inappropriate conduct in connection with these personal loans,” it said in a securities filing, without identifying the conduct. The lack of the loan disclosure led ProPetro to submit false statements to the SEC over one of the share pledges, the filing said.

A spokesperson for the company and Redman declined to comment beyond what was in the filing.

Reuters last year first disclosed the SEC was investigating ProPetro over its financial and public disclosures.

Former finance chief Jeffrey Smith also stepped down as chief administrative officer, the company said in a statement. It was Smith’s second demotion since an internal audit of the company was disclosed last August.

The company’s statement did not say why Smith was demoted. He will become “special advisor” to the new CEO, it said. Smith will receive a salary of $425,000 annually but no incentive awards or cash bonus, according to a company filing.

Gobe last year was appointed principal executive after the company’s audit committee expanded its probe to executive expense reimbursements. Redman reimbursed the company for roughly $346,000.

An independent accounting firm continues to examine the board’s findings, the company said.

In other management moves at ProPetro since last July, director Royce Mitchell and General Counsel Mark Howell left their positions in August, and the prior month, Chairman Spencer Armour III resigned. Chief Accounting Officer Ian Denholm resigned in October.

Additional reporting by Shariq Khan in Bengaluru, Editing by Sherry Jacob-Phillips and David Gregorio

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