Newspaper article THE JOURNAL RECORD

OKC-Based SandRidge CEO Settles Lawsuit

Newspaper article THE JOURNAL RECORD

OKC-Based SandRidge CEO Settles Lawsuit

Article excerpt

As SandRidge Energy's stock price plummeted along with natural gas prices in late 2008, CEO Tom Ward was forced to borrow $75 million from Tulsa billionaire George Kaiser to pay back bank loans he took out using his stake in the company as collateral.

The personal loans sparked a series of financial transactions between Kaiser and Ward that culminated in Ward giving Kaiser 8.9 million shares of SandRidge stock to repay Kaiser about $50 million.

The Kaiser stock transfer and Ward's other stock sales were the subject of a shareholder lawsuit in 2010 that Ward settled out of court earlier this month on the eve of trial.

The terms of the settlement were private, and not disclosed in court records.

In her lawsuit, shareholder Donna Ann Gabriele Chechele sought to force Ward to repay SandRidge $23.9 million in profits she claimed the CEO made from short-swing stock transactions in 2008 and 2009. The lawsuit was filed under a federal securities law that allows shareholders to sue to have the profits returned to companies if executives make money from buying and selling stock over a short period of time. The law is meant to discourage insider trading.

Jon M. Williford, an attorney for Chechele, declined to comment on the settlement because of a confidentially agreement. Several other attorneys who represented Chechele in her lawsuit, including Bill Carmody, partner of the noted commercial litigation firm Susman Godfrey LLP, did not respond to requests for comment.

A representative for SandRidge and Ward declined to comment on the legal proceedings.

Chechele, who lives in New Jersey and owns one share of SandRidge stock, is listed as a plaintiff in 20 other shareholder lawsuits in federal courts across several states, according to a search of court records. She dropped her lawsuit against Ward on Nov. 9 after her legal team engaged in settlement talks with Ward's attorneys, according to court documents.

Both Ward and Kaiser were to testify before a federal jury had the case gone to trial in U.S. District Court for the Western District of Oklahoma. Several private emails and promissory notes outlining the details of the loans, many of them filed under seal with the court, were to be used as exhibits in the lawsuit, according to court documents.

Brian McCall, who teaches corporate and commercial law at the University of Oklahoma College of Law, said insider trading lawsuits like Chechele's have become more common. Because the plaintiff doesn't have to prove knowledge or intent of an insider transaction, computer programs are often used to match up purchases and sales of stock.

McCall has advised many Fortune 500 companies to be careful about buying and selling stock, regardless of the intent. Although McCall didn't closely follow the Chechele lawsuit, he said it was important not to jump to conclusions about Ward's intent when he purchased and then sold the company's stock. …

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