Oil and gas company Hyperdynamics announced this week that it has reached a $75,000 settlement with the Securities and Exchange Commission to resolve violations of the books and records and internal control provisions of the Securities Exchange Act.
Hyperdynamics said it consented to the SEC order without admitting or denying the SEC's findings. "This settlement fully resolves the SEC's investigation," the company said.
As previously disclosed, the SEC had issued a subpoena to Hyperdynamics concerning possible violations of the Foreign Corrupt Practices Act (FCPA). According to the SEC's order, from July 2007 through October 2008, Hyperdynamics, through its subsidiary, paid $130,000 for public relations and lobbying services in the Republic of Guinea to two supposedly unrelated entities—$55,000 to BerMia Service SRL, and $75,000 to Africa Business Service (ABS).
"The subsidiary’s books and records were consolidated with Hyperdynamics’s books and records, and these payments were recorded as public relations and lobbying expenses, even though the company lacked sufficient supporting documentation to determine whether the services were actually provided and to identify the ultimate recipient of the funds," the SEC's order states.
As Compliance Week previously reported, HyperDynamics said it received a subpoena from the Justice Department in September 2013, requesting that the company produce documents relating to its operations in Guinea. In May 2015, the Department closed its investigation into possible FCPA violations by Hyperdynamics without bringing any charges against the company.
In reaching this resolution, the SEC considered remedial acts undertaken by the company and cooperation afforded the Commission staff. The SEC order recognizes that, beginning in July 2009, Hyperdynamics replaced its senior management team and its entire board, revised its policies, implemented training programs, increased its legal and accounting personnel, and instituted a series of procedures to more strictly control transfers of funds.