This Fund is designed to compensate investors based on their losses on shares of Miller Energy common stock (the "Securities") purchased or acquired on March 22, 2010 through April 29, 2015, inclusive (the “Relevant Period”), due to the misconduct of the Respondents as described below.
An investor who did not purchase shares of the Securities during the Relevant Period or who is an Excluded Party is ineligible to recover under this Plan.
On August 6, 2015, the Commission instituted public administrative and cease-and-desist proceedings against Miller Energy, it’s former officer Boyd and Hall, and Vogt, the engagement partner at a now defunct independent audit firm who audited Miller Energy’s financial statements for fiscal year 2010.1 The Commission later resolved these proceedings by separate settled orders as to Miller Energy2 on January 12, 2016, and as to Boyd3, Hall4, and Vogt5 on June 7, 2016.
In the Orders, the Commission found that the Miller Energy Respondents engaged in financial accounting and reporting fraud, as well as audit failures, related to the valuation of certain oil and gas assets in Alaska (the “Alaska Assets”) acquired by Miller Energy. Miller Energy, an oil and gas company headquartered in Houston, Texas, purchased these assets for $2.25 million in cash – along with the assumption of certain liabilities it valued at approximately $2 million – during a competitive bid in a bankruptcy proceeding in December 2009. According to the Orders, Miller Energy subsequently reported those assets at an overstated value of $480 million and recognized a one-time “bargain purchase” gain of $277 million for its fiscal third quarter ended January 2010 and fiscal year ended April 2010.
The Commission found that Boyd, Miller Energy’s Chief Financial Officer, failed to account for the acquisition in accordance with generally accepted accounting principles (“GAAP”) which required Miller Energy to record the Alaska Assets at “fair value.” The Commission also found that Boyd used a report containing expense numbers that were knowingly understated by Hall, Miller Energy’s Chief Executive, and double counted $110 million of certain fixed assets.
In addition, according to the Orders, Vogt, the lead engagement partner assigned to the audit of Miller Energy’s financial statements for fiscal year 2010, failed to comply with the Public Company Accounting Oversight Board rules and standards in auditing Miller Energy’s financial statements, including its accounting for the Alaska Assets. The Commission found that Vogt failed to exercise due professional care and skepticism by not adequately assessing whether Miller Energy’s accounting treatment for the acquisition of the Alaska Assets complied with GAAP. Further, the Commission Orders show that Vogt failed to obtain sufficient competent evidential matter for management’s assertions regarding the fair value of the Alaska Assets.
The Commission ordered Miller Energy to pay a civil penalty of $5,000,000 which could be satisfied by the Commission having an allowed general unsecured claim in Class 4 of the Miller Energy’s Joint Plan of Reorganization, Case No. 15-00236, pending in the United States Bankruptcy Court for the District of Alaska (the “Bankruptcy Case”), in the amount of $5,000,000 or by Miller Energy making payments as directed over the course of three years, starting within five days of the termination of the Bankruptcy Case.
In their respective Orders, the Commission ordered Hall and Boyd to each pay a $125,000 civil penalty to the Commission for transfer to the U.S. Treasury.
On January 28, 2016, the Bankruptcy Court entered an order in the Bankruptcy Case granting the Commission’s allowed general unsecured claim in the amount of $5,000,000. The Commission collected $897,049.77 from the Miller Energy Bankruptcy. The Bankruptcy Trustee filed the final tax return for the Bankruptcy in September 2023.
On August 15, 2017, in a related matter, the Commission instituted and simultaneously settled the KPMG AP against Miller Energy’s successor auditor, KPMG, and engagement partner, Riordan, in connection improper professional conduct and securities violations related to an audit of Miller Energy’s financial statements. In the KPMG Order, among other things, the Commission ordered KPMG to pay $4,675,680 in disgorgement, $558,319 in prejudgment interest, and a $1,000,000 civil penalty, and Riordan to pay a $25,000 civil penalty.
KPMG and Riordan have paid in full, and the Commission holds a total of $6,258,999 in an interest-bearing account at the U.S. Treasury, pursuant to the KPMG Order.
On February 23, 2022, the Commission issued an order that created the Fair Fund6, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the funds collected, including any future funds collected in the Miller Energy AP, can be distributed to harmed investors. The Fair Fund consists of $7,239,670.05, and any additional funds collected from the Respondents, pursuant to the Orders, will be added to the Fair Fund.
The Commission appointed Heffler, Radetich, & Saitta LLP as the Tax Administrator for the Fair Fund on August 31, 2022. The Commission appointed GBP as the Fund Administrator for the Fair Fund on September 29, 2022.
If you wish to participate in the Fair Fund, under the terms of the Plan you must submit a Claim Form and the necessary documentation no later than October 21, 2024, to be eligible to recover from the Fair Fund (Guidelines For Filing A Claim Form).
Once all the Eligible Claimants have been determined, the Fund Administrator will calculate each Eligible Claimant’s Recognized Loss in accordance with the Plan of Allocation and will distribute funds to the Eligible Claimants on a pro rata basis.
Copies of the administrative order and the approved distribution plan relating to this fair fund are located in the Resources page.
Additional information can be found on the Frequently Asked Questions (FAQs) page.