Litigation Release No. 23993 / November 20, 2017

Securities and Exchange Commission v. Penn West Petroleum Ltd., d/b/a Obsidian Energy Ltd., Todd H. Takeyasu, Jeffery A. Curran, and Waldemar Grab, No. 17-CV-4866 (S.D.N.Y. filed June 28, 2017)

Court Orders Oil and Gas Company to Pay Penalties for Accounting Fraud

A Canadian-based oil and gas company has agreed to pay $8.5 million in civil penalties to settle charges brought by the Securities and Exchange Commission in June 2017 arising from an extensive, multi-year accounting fraud.

The final judgment, entered on November 20, 2017, by the Honorable Gregory H. Woods of the U.S. District Court for the Southern District of New York, also permanently enjoins Penn West from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) thereunder; Section 17(a) of the Securities Act of 1933; Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-16 thereunder; and Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.

The SEC's litigation continues against the company's former CFO, Todd Takeyasu and former vice president of accounting and reporting, Jeffery Curran. The SEC charged them in June, along with Penn West and the company's former operations controller, Waldemar Grab, with orchestrating the allegedly fraudulent movement of hundreds of millions of dollars in expenses from operating expense accounts to capital expenditure accounts. This alleged fraudulent movement caused Penn West to artificially reduce its operating costs by as much as 20 percent in certain periods, which falsely improved reported metrics for oil extraction efficiency and profitability. The court previously entered judgment against Grab, imposing permanent injunctions and an officer-and-director bar.

The SEC's ongoing litigation is being led by Sarah Heaton Concannon, Thomas A. Bednar, and Matthew Spitzer, assisted by Colin J. Rand.