Weatherford Settles With SEC
September 27 2016 - 1:30PM
Dow Jones News
Oil-field-services company Weatherford International PLC agreed
to a $140 million civil penalty to settle Securities and Exchange
Commission claims that the company used deceptive tax accounting to
inflate earnings over a roughly five-year period.
According to the SEC, settlements also were reached with two of
Weatherford's former tax executives, James Hudgins, who had served
as vice president of tax, and Darryl Kitay, who was a tax manager,
at the time.
The defendants consented to the SEC's order without admitting or
denying the findings. Mr. Hudgins's counsel said he cooperated
fully with the SEC's investigation and was pleased to have the
matter behind him. Mr. Kitay's counsel wasn't immediately
available.
Legal counsel for Weatherford and the two former executives
declined to comment or weren't immediately available to
comment.
According to the SEC enforcement order, Weatherford issued false
financial statements between 2007 and 2012 that inflated the
oil-field services company's earnings by more than $900 million.
The SEC said the company also issued materially false and
misleading information about its earnings, effective tax rate and
other important financial metrics and didn't have sufficient
internal controls over its income-tax accounting during the
period.
As a result Weatherford issued restatements of financial results
on three separate occasions over 18 months, starting in March 2011,
the SEC said.
The company's tax-accounting practices created the misperception
that Weatherford's tax structure, which the company had touted to
analysts, was more successful than it actually was, the SEC
said.
The settlement includes requirements that Weatherford report its
progress on compliance rules to the SEC staff for two years.
The SEC said agreements with the former tax-accounting
executives include requirements that Mr. Hudgins pay $334,067 in
disgorgement, interest, and penalty, and that Mr. Kitay pay a
$30,000 penalty.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
September 27, 2016 13:15 ET (17:15 GMT)
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