Former execs lose bid to have SEC charges dropped

A New York judge has dismissed attempts by two former finance executives at Calgary-based Penn West Petroleum Ltd. to overturn fraud-related charges brought by the U.S. Securities and Exchange Commission.

In a decision filed Monday, Judge Gregory Woods says former chief financial officer Todd Takeyasu and accounting vice-president Jeffery Curran are correct in arguing the SEC has little evidence of a personal motive for them to have acted fraudulently in the case.

But he added there is support for the SEC’s argument that the two were aware that accounting irregularities were taking place and did little to stop them or strengthen internal controls.

The SEC charges were laid against Penn West and three executives a year ago, shortly after the company changed its name to Obsidian Energy Ltd. None of the allegations has been proven in court.

Obsidian Energy announced a US$8.5-million settlement with the agency in November. The third executive, Waldemar Grab, agreed to a settlement earlier last year.

The SEC alleges hundreds of millions of dollars were moved from operating expense accounts to capital expenditure accounts to improve the appearance of the company’s operating metrics, activity that led to the company having to restate its financial statements in 2014.

In 2016, Penn West paid $53 million to settle class-action lawsuits by Canadian and American shareholders.