Linn is guilty of none of these infractions, don't see how the Inquiry can go any further. Its a non-issue but until its resolved, Linn is going to trade like an anchor. I own Linn with a very attractive average price per share but if I didn't own Linn, I wouldn't buy it until this is resolved. So you have sellers and an absence of buyers.
Whether Mark Ellis is showing the discipline required of a CEO is another matter. By his own admission, he wasn't paying much attention to Linn's development efforts, he was concentrating on acquisitions. What the heck, it was only a few hundred million they dumped into dry holes in the hogshooter field.
From SEC Website:
"Common violations that may lead to SEC investigations include:
• Misrepresentation or omission of important information about securities
• Manipulating the market prices of securities
• Stealing customers' funds or securities
• Violating broker-dealers' responsibility to treat customers fairly
• Insider trading (violating a trust relationship by trading on material, non-public information about a security)
• Selling unregistered securities."
"Misrepresentation or omission of important information about securities "
Not the case with LINE. Just go to LINE's website and look under presentations.
Feb. 15, 2013 document LINN's Hedging Strategy Explained
This document provides more information than required.
Fact #1 – LINN is confident in the validity and accuracy of its audited financial statements.
Fact #2 – LINN generates sufficient cash flow to cover its distributions
Fact #3 – LINN does not always buy “in the money” puts.
Fact #4 – LINN does not restructure its hedge book to manipulate earnings.
Fact #5 – During 2012 LINN purchased $583 million of puts for the following reasons:
Fact #6 – LINN’s publicly stated Adjusted EBITDA is the same that the company provides to its lenders.
Fact #7 – LINN’s taxable income is low relative to its cash flow.
Fact #8 – LINN only cancels out of the money hedge positions to comply with lender covenants.
Fact #9 – LINN does not issue debt and equity securities to pay its distribution.
Go to the document yourself for details, I have rarely seen any company provide this much detail about their operations.
correct but a company is allowed to present their financials on a non-GAAP basis if they feel it is more representative of the true financial position of the company as long as they provide a reconciliation back to GAAP financials. I don't know how it can take very long for the SEC to see the reconciliation so I can't understand why we have no answer in 5.5 weeks