In what appears to be a reaction to recent New York Times articles asserting that some Marcellus Shale gas companies were overbooking their natural gas reserves, the Securities and Exchange Commission is issuing subpoenas to investigate the accuracy of financial statements. New York Congressman Maurice Hinchey asked the SEC to investigate the issue following publication of the assertions in the New York Times, which questioned how gas companies calculate and publicly disclose performance of shale gas wells.
Hinchey wants the SEC to consider updating its oil and gas reserve reporting requirements to provide greater disclosure to investors and the public, and proposed that financial statements be subjected to third-party audits. However, financial statements are now widely subjected to independent audits, and Arthur Brisbane, public editor of the New York Times, has cast considerable doubt on the source material for the articles, describing them as having "serious shortcomings." The conclusions reached in the article have also been challenged by a number of sources, including a M.I.T. Study Group and a UBS Investment Analyst. The SEC has not announced whether it will continue issuing subpoenas.©2013 Greenberg Traurig, LLP. All rights reserved.