In the Matter of Weatherford International PLC, et al.
Admin. Proc. File No. 3-17582 In the Matter of Ernst & Young LLP, et al. Admin. Proc. File No. 3-17628
Nov. 1, 2022
On September 27, 2016, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (“Weatherford Order”) against Weatherford International PLC, f/k/a Weatherford International LTD (“Weatherford”)., James Hudgins, CPA (“Hudgins”), and Darryl Kitay, CPA (“Kitay”) (collectively, the “Weatherford Respondents”). The Commission found that, between 2007 and 2012, Weatherford, a large multinational provider of oil and natural gas equipment and services, issued false financial statements that inflated its earnings by over $900 million in violation of U.S. Generally Accepted Accounting Principles. Weatherford issued materially false and misleading statements about its net income, earnings per share, effective tax rate, and other key financial information. Weatherford did not have sufficient internal accounting controls to identify and properly account for its accounting of income taxes throughout the relevant period. See the Commission’s order: Release No. 33-10221.
On October 18, 2016, the Commission instituted and simultaneously settled a related administrative and cease-and-desist proceedings (“Accounting Order”) against Ernst & Young LLP (“Ernst & Young”), Craig R. Fronckiewicz, CPA, and Sarah E. Adams, CPA (together, with the Weatherford Respondents, the “Respondents”) for their roles in the conduct described in the Weatherford Order while serving as the external auditor, coordinating (i.e., signing) partner, and tax partner for Weatherford, respectively. See the Commission’s order: Release No. 34-79109.
The Commission ordered the Weatherford Respondents to pay a total of $140,364,067.00 in disgorgement, prejudgment interest, and civil money penalties; and ordered Ernst & Young to pay a total of $11,840,107.00 in disgorgement, prejudgment interest, and civil money penalty. In each of the orders, the Commission created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, for the monies ordered.
The Respondents have paid a total of $152,204,174.00 in disgorgement, prejudgment interest, and civil money penalties, as ordered, into their respective Fair Fund.
On November 30, 2017, the Commission issued an order consolidating the two Fair Funds into a single Fair Fund (the “Fair Fund”) for distribution to harmed investors. See the Commission’s order: Release No. 34-82185.
The Fair Fund has been deposited in an interest-bearing account at the U.S. Department of the Treasury’s Bureau of the Fiscal Service, and any accrued interest will be for the benefit of the Fair Fund.
On August 2, 2018, the Commission issued an order appointing Miller Kaplan Arase, LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-83766.
On July 16, 2020, the Commission issued an order appointing Epiq Systems, Inc. (“Epiq”) as the Fund Administrator and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-89333.
On November 17, 2022, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). See the Commission’s Notice: Release No. 34-96340 and the Proposed Plan.
The Proposed Plan provides for the distribution of the Net Available Fair Fund, comprised of the Fair Fund, plus accrued interest, less taxes, fees, and expenses, to compensate investors for their losses on the shares of Weatherford common stock purchased between February 25, 2009 and November 12, 2012 due to the conduct of the Respondents described in the Orders.
On January 18, 2023, the Commission issued an order extending time to enter an order approving or disapproving plan of distribution until June 30, 2023. See the Commission’s Order: Release No. 34-96687.
On June 29, 2023, the Commission issued a second order extending the time to enter an order approving or disapproving the plan of distribution to September 29, 2023 to allow for further evaluation and analysis to properly address the comments. See the Commission’s Order: Release No. 34-97818.
For more information, please contact the Commission:
Office of Distributions