Dale Redman, CEO of Midland, Texas-based oil services company ProPetro Holding Corp., agreed to pay the Securities and Exchange Commission (SEC) $ 195,046 to settle charges that the company violated the financial information by providing misleading information about its perquisites.
This action comes after the resignation of several executives of ProPetro in response to a review by the company’s audit committee completed last year and concluding the accounting irregularities. The company has appointed an interim chief financial officer and a new chief accounting officer and general counsel as well as a new chief executive officer and new members of the board of directors.
- The SEC, crediting ProPetro for its shares after discovering the problems, did not impose any settlement fees on the company.
Redman, who co-founded the company and served as its CEO until his resignation last year, hired ProPetro for $ 380,594 in expenses unrelated to his job, the SEC said.
He also failed to disclose that he had pledged his company’s shares as part of two private real estate transactions.
He also caused the company’s failure to disclose $ 47,591 in additional benefits he received.
“Federal securities laws are crystal clear,” said David Peavler, director of the SEC’s regional office in Fort Worth. “Issuers must accurately disclose and record executive compensation and shareholding. ProPetro has failed in both respects.
Among the accounting problems uncovered by the SEC, the company made monthly payments to a private aviation company for the use of an aircraft by Redman, both for business and private purposes, and for pilots to fly. the plane, without revealing that Redman had a 50% stake in the company.
The company also did not disclose Redman’s use of a corporate credit card for personal use.
And in violation of company rules, Redman pledged his company’s shares as collateral for a bank loan to purchase real estate, then did so a second time for another real estate purchase, without disclosing these. transactions to the company.
The problems emerged after the company’s audit committee hired an independent outside lawyer and accountants to look into an issue unrelated to Redman’s perks but which exposed the problems.
In its efforts to resolve the issues once they became aware of them, the company hired a new management team and additional finance staff, all with experience in public companies, appointed several new directors and established a committee. of disclosure.
It has also developed new internal controls and strengthened its training requirements.
“ProPetro acknowledges that the Commission does not impose a civil penalty based on its cooperation in a Commission investigation,” the SEC said in the order.
The SEC imposed his settlement fee of $ 195,046 on Redman in addition to the $ 345,636 he reimbursed the company.