Image courtesy of Cobalt International EnergyCobalt International Energy Inc. said Tuesday it received a “Wells Notice” in connection with the SEC’s investigation of its operations in Angola and potential liabilities under the Foreign Corrupt Practices Act.
In a securities filing, Cobalt said the SEC’s staff has made a preliminary determination to recommend that the agency institute an enforcement action, alleging violations of certain federal securities laws.
The independent oil and gas producer said according to the Wells Notice, “the Staff may recommend that the SEC seek remedies that could include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest and civil money penalties.”
In 2011, the SEC issed a formal order of investigation regarding Cobalt’s operations in Angola.
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Cobalt’s August 5, 2014 securities filing said:
As previously disclosed, the Company is currently subject to a formal order of investigation issued in 2011 by the U.S. Securities and Exchange Commission (the “SEC”) related to its operations in Angola. See the discussion under the caption “Risk Factors—We may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act, and any determination that we violated the U.S. Foreign Corrupt Practices Act could have a material adverse effect on our business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for more information.
In connection with such investigation, on the evening of August 4, 2014, the Company received a “Wells Notice” from the Staff of the SEC stating that the Staff has made a preliminary determination to recommend that the SEC institute an enforcement action against the Company, alleging violations of certain federal securities laws. In connection with the contemplated action, the Staff may recommend that the SEC seek remedies that could include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest and civil money penalties. The Wells Notice is neither a formal allegation nor a finding of wrongdoing. It allows the Company the opportunity to provide its reasons of law, policy or fact as to why the proposed enforcement action should not be filed and to address the issues raised by the Staff before any decision is made by the SEC on whether to authorize the commencement of an enforcement proceeding. The Company intends to respond to the Wells Notice in the form of a “Wells Submission” in due course.
The Company has fully cooperated with the SEC in this matter and intends to continue to do so. The Company has conducted an extensive investigation into these allegations and the receipt of the Wells Notice does not change the Company’s belief that its activities in Angola have complied with all laws, including the U.S. Foreign Corrupt Practices Act. The Company is unable to predict the outcome of the SEC’s investigation or any action that the SEC may decide to pursue.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.