OKLAHOMA CITY (CN) – SandRidge Energy settled claims it used illegal separation agreements and retaliated against a whistleblower who shared worries about how publicly reported oil reserves were being calculated, the government said Tuesday.
The U.S. Securities and Exchange Commission says the Oklahoma City-based oil and gas firm agreed to pay $1.4 million in penalties, subject to the company’s bankruptcy plans. SandRidge does not admit or deny the agency’s findings under the terms of the settlement.
The SEC says SandRidge used “overly prohibitive provisions” in separation agreements while under active commission investigation. It alleges the company conducted several reviews of separation agreements after a new whistleblower protection rule became effective in August 2011.
“While, as a general matter, the commission is unable to determine if former officers or employees did not report to or communicate with the commission because of the violative provisions, these provisions expressly limited an employee’s ability to communicate possible securities law violations with any government agency,” according to an eight-page order instituting cease-and desist proceedings.
The SEC claims the unnamed whistleblower expressed concern in December 2014 that a draft report describing an internal audit had “missed the primary risks and problems associated with the entire reserves process.” The agency says the whistleblower was fired in retaliation.
“The employee had been offered a promotion, which was turned down,” the SEC said in a press release Tuesday. “Just months later, senior management concluded the employee was disruptive and could be replaced with someone ‘who could do the work without creating all the internal strife.’ The company had conducted no substantial investigation of the whistleblower’s concerns and only initiated an internal audit that was never completed. The employee’s separation agreement also contained the company’s prohibitive language that violated the whistleblower protection rule.”
SandRidge spokesman David A. Kimmel said the company has cooperated with the SEC during the investigation and is “pleased” to resolve the case.
“While the company will not comment on the underlying facts of the investigation, we note that, under the company’s plan of reorganization, the fine will be satisfied by a payment to the SEC of approximately $100,000,” he said Tuesday.