April 3 (Reuters) - Oil and gas producer Magnum Hunter Resources Corp said it may face enforcement action by the U.S. Securities and Exchange Commission following investigations related to its financial reporting in 2012 and 2013.
Magnum Hunter said it received on March 24 a ‘wells Notice’ from the SEC’s Division of Enforcement about the regulators making a preliminary decision to recommend an enforcement case against the company.
A Wells Notice is usually the last step in an SEC investigation before an enforcement action is filed, and gives a recipient one last chance to persuade regulators not to file a lawsuit.
Notices were also sent to Chief Executive Gary Evans and J. Raleigh Bailes Sr., the former chairman of the company’s audit committee and chief financial officer at the time when Magnum Hunter decided to dismiss its prior independent registered public accounting firm and its former chief accounting officer.
In April 2013, the SEC asked Magnum Hunter for documents related to its internal controls and change in outside auditors in 2012 and 2013.
The company received subpoenas related to the matter in December 2013 and last year.
Magnum Hunter said in a regulatory filing on Friday it was unable to determine the amount of any potential monetary penalties or any other impact as a result of the proposed enforcement action. (1.usa.gov/1F9WIvo)
The company said it intended to respond with the reason why it believes an enforcement action against it should not be taken.
Magnum Hunter’s shares closed at $2.80 on Thursday. The stock has fallen 64 percent since June, when oil prices started falling. (Reporting by Kanika Sikka in Bengaluru; Editing by Jonathan Oatis)