New York's Martin Act Strikes Again

New York Times
August 18, 2011

New York Subpoenas Energy Companies Over Claims About Gas Wells
Ian Urbina

New York Attorney General Eric Schneiderman has issued subpoenas to Range Resources, Cabot Oil and Gas and Goodrich Petroleum seeking information about whether the companies have accurately described to investors the prospects for their natural gas wells. Mr. Schneiderman also broadened a continuing investigation by his office into a fourth company, Chesapeake Energy, asking it to respond to similar questions about its shale gas wells. According to the New York Times report, investigators have requested documents relating to the formulas that companies use to predict how much gas their wells are likely to produce in the coming decades. The subpoenas also request documents related to the assumptions that companies have made about drilling costs in their estimates of the wells’ long-term profitability. The requested documents relate to apparent discrepancies between what companies have told investors about gas well performance and costs and what is revealed in their federal filings. The authority for the investigation is New York’s Martin Act, which gives the Attorney General broad authority over businesses, and was used extensively by Mr. Schneiderman’s predecessor, Eliot Spitzer, to investigate Wall Street firms.