Oil Firm to Pay $140M for Accounting-Fraud Claims

     (CN) — The Securities and Exchange Commission said Tuesday that oil-services giant Weatherford International will pay $140 million to settle claims that it inflated earnings in financial statements.
     The SEC alleged Weatherford used deceptive accounting practices to lower its designated year-end amount for income taxes by $100 million “so the company could better align its earnings results with its earlier-announced projections and analysts’ expectations.”
     The oil and natural gas equipment and services company allegedly inflated its earnings by over $900 million and issued false statements about its net income, earnings per share, effective tax rate and other financial information.
     “As a result of the fraudulent income tax accounting, Weatherford accrued millions in improper benefits by using artificially inflated common stock to acquire numerous companies,” the SEC’s order states.
     Weatherford was forced to restate its financial statements three times between 2011 and 2012.
     The company and two of its accounting executives — James Hudgins and Darryl Kitay — reached the settlement with the SEC without admitting or denying violations of federal securities law.
     Weatherford will pay the $140 million penalty, while Kitay will pay a $30,000 penalty and Hudgins will pay $334,000 for disgorgement, interest and penalty.
     “Weatherford denied its investors accurate and reliable financial reporting by allowing two executives to choose their own numbers when the actual financial results fell short of what was previously disclosed to analysts and the public,” Andrew Ceresney, director of the SEC’s Enforcement Division, said in a statement.

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