The United States’ Securities and Exchange Commission (SEC) on Monday announced that Texas-based oilfield services company ProPetro Holding Corp. and its founder and former CEO, Dale Redman, had agreed to settle charges that they failed to properly disclose some of Redman’s executive perks and two stock pledges.
A statement issued by the commission on the regulatory infractions indicated that its order finds that Redman caused ProPetro to incur $380,594 worth of personal and travel expenses unrelated to the performance of his duties as CEO. He also failed to disclose to company personnel that he had pledged all of his ProPetro stock in two private real estate transactions.
During the same period, ProPetro failed to properly disclose $47,591 in additional, authorized perks it paid to Redman. As a result of these failures, the company issued public filings that included material misstatements regarding executive perks and stock ownership, and failed to accurately record Redman’s perks in its books and records.
In his remarks, Director of the SEC’s Fort Worth Regional Office, David Peavler, said: “The federal securities laws are crystal clear: issuers must accurately disclose and record executive compensation and stock ownership. ProPetro failed in both respects.”
The SEC’s order finds that ProPetro violated reporting, books and records, internal accounting controls, and proxy provisions of the federal securities laws, and that Redman violated proxy provisions and negligence-based antifraud provisions.
Redman also caused ProPetro’s reporting and books and records violations. Without admitting or denying the SEC’s findings, ProPetro and Redman agreed to cease-and-desist from further violations, and Reman agreed to pay a $195,046 penalty.
The order notes ProPetro’s significant cooperation with the agency’s investigation as well as its extensive remedial efforts, which included hiring an entirely new management team with significant public company experience, hiring additional finance department personnel, installing several new directors, and developing new controls, policies, and procedures concerning perks.
The SEC’s investigation was conducted by Rebecca Fike and Melvin Warren, and was supervised by Scott Mascianica and Eric Werner of the Fort Worth Regional Office.
