Oil-field-services company settles with SEC over tax-accounting practices
From the Wall Street Journal
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 available for comment. Weatherford said the matter was resolved.
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.
