It was back in April that Reuters first reported on potential conflicts of interest created through personal loans to Aubrey McClendon, the co-founder and CEO of Chesapeake Energy Corporation (CEC).
According to various sources, including Reuters (4/18/12) and Fox Business (4/20/12), McClendon is said to have borrowed about $1.1 billion via three companies he is said to control, using his personal stake in oil and natural gas wells within the Chesapeake portfolio as collateral.
According to the ERISA lawsuit, proceeds from the loans were to help finance an opportunity for McClendon to personally invest in the very oil and gas wells he had used as collateral for the loans.
"This action is brought to address material disclosure violations permitted by the board of directors and to ensure that any damages suffered by Chesapeake by reason of these violations are borne by the individual defendants, and not by Chesapeake and its innocent shareholders," the ERISA lawsuit says.
A direct consequence of the Reuters article was a massive reduction in value of Chesapeake stock, which is reported to have dropped $500 million in value when news of the potential conflict broke. The loss impacts any employee serving as a participant in an employee savings plan, or in the throes of building ERISA pension value for future retirement. A media report May 15th confirmed that thousands of CEC workers have retirement portfolios that remain heavily invested in company stock, which declined sharply following revelations surrounding McClendon's business dealings.
On that day, CEC stock closed at $14.34. Down from $25 just two months prior.
It was reported May 3 that the Fort Worth Regional office of the Securities and Exchange Commission has launched an informal inquiry into the matter.
Fox Business reports that the ERISA lawsuit was filed in the US District Court Of Western District Of Oklahoma, and brought by Deborah Mallow IRA SEP Investment Plan. It also named several Chesapeake directors as defendants.
READ MORE EMPLOYEE STOCK OPTION LEGAL NEWS
Fox Business noted in its report that McClendon was the highest-paid executive amongst all Standard & Poors 500 companies in 2008, taking home $112 million in total compensation for the year. That's a hard pill to swallow for any employee enrolled in an employee savings plan, or having employee stock options that might have incurred losses as the direct result of the CEO's alleged actions and media reports surrounding that alleged activity. All current and former employees of CEC who may have purchased or participated in various profit sharing retirement plans, including the Chesapeake Energy Savings & Incentive Stock Bonus Plan are urged to contact an ERISA attorney.