Dale Redman, CEO of Midland, Texas-based oil-field services company ProPetro Holding Corp., agreed to pay $195,046 to the Securities and Exchange Commission (SEC) to settle charges he caused the company to violate financial disclosures by providing misleading information on his perquisites.
The action comes after several of ProPetro’s executives resigned in response to a review the company’s audit committee completed last year finding the accounting irregularities. The company appointed an interim CFO and a new chief accounting officer and general counsel as well as a new executive officer and new board members.
- The SEC, crediting ProPetro for its actions after discovering the problems, didn’t impose any settlement charge on the company.
Redman, who co-founded the company and served as its CEO until his resignation last year, caused ProPetro to incur $380,594 worth of expenses unrelated to his job, the SEC said.
He also failed to disclose that he had pledged his company stock as collateral in two private real estate deals.
He also caused the company’s failure to disclose $47,591 in additional perks he received.
“The federal securities laws are crystal clear," said David Peavler, director of the SEC’s Fort Worth regional office. "Issuers must accurately disclose and record executive compensation and stock ownership. ProPetro failed in both respects.”
Among the accounting problems the SEC found, the company made monthly payments to a private aviation company for Redman’s use of a plane, for both business and private purposes, and for pilots to fly the plane, without disclosing that Redman had a 50% ownership in the company.
The company also didn’t disclose Redman’s use of a company credit card for personal purposes.
And in violation of the company’s rules, Redman pledged his company stock holdings as collateral for a bank loan to purchase real estate, and then did it a second time for another real estate purchase, both without disclosing those transactions to the company.
The problems came to light after the company’s audit committee hired an independent outside counsel and accounting advisors to review a matter unrelated to Redman’s perquisites but which uncovered the problems.
In its effort to address the problems once they learned of them, the company hired a new management team and additional finance staff, all with public company experience, installed several new directors and created a disclosure committee.
It also developed new internal controls and beefed up its training requirements.
“ProPetro acknowledges that the Commission is not imposing a civil penalty based upon its cooperation in a Commission investigation,” the SEC said in the order.
The SEC imposed its $195,046 settlement charge on Redman in addition to $345,636 he reimbursed to the company.