Chesapeake Energy (CHK) released first-quarter earnings on May 1, amid serious concerns about the business practices and strategies of the company and its beleaguered CEO Aubrey McClendon. The earnings report did little to ease shareholder unease, with Chesapeake reporting a loss of $0.11 per share.

CEO Aubrey McClendon’s Future Tenuous

The U.S. Securities and Exchange Commission is informally investigating Chesapeake’s “Founders Well Participation Program,” the plan that granted CEO Aubrey McClendon a 2.5% stake in each of the company’s wells. The Internal Revenue Service is also investigating the program. In addition to this, Senator Bill Nelson is now expected to request the U.S. Justice Department’s Financial Fraud Enforcement Task Force to conduct a formal investigation for “evidence of fraud, price manipulation, conflicts of interest, or other illegal activities.”

Chesapeake’s board of directors backtracked on earlier statements that it was aware of and approved McClendon’s mortgages on his ownership stakes, and is now indicating that they “did not review, approve, or have knowledge of the specific transactions engaged in by McClendon or the terms of those transactions.” The board is reviewing McClendon’s financial arrangements with the firms that backed these transactions. The company then announced that McClendon will be replaced as chairman, which will end the arrangement by which McClendon was granted ownership in the wells.

Amid these disturbing revelations, it was also reported that McClendon ran a private hedge fund that “traded energy and other commodities” separately from oversight of Chesapeake’s fund managers and risk analysts for years during his tenure, at least from 2004 to 2008.To continue reading, click here.