2 comments

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  hemingway

  10 months ago

  There is new info in the CREW report. "Rep. Pearce was the president of Lea Fishing Tools from which, in 2002, he drew a salary of $277,352 and held stock worth between $1 and $5 million. In the fall of 2003, Rep. Pearce sold the company’s assets to Key Energy, in exchange for 542,477 shares of common stock. The value of the stock at the time was $5.2 million. During an October 29, 2003 conference call, however, the president of Key Energy said Lea Fishing Tools was purchased for $12 million. Rep. Pearce failed to report the transaction on his 2003 financial disclosure report, and the $6.8 million discrepancy remains unresolved. In the 2003 report, Rep. Pearce indicated only that he was the president of Trinity Industries, Inc. “F/K/A Lea Fishing Tools, Inc.” and that he held between $5 and $25 million of stock in the company. Given that all of Lea Fishing Tools’ assets were transferred to Key Energy, it appears that Trinity Industries may be a holding company for the Key Energy stock, but this is unclear." There is $6.8 million discrepancy.
  
  There was a class action after the acquisition of Lea Fishing by Key Energy.
  The complaint charges Key Energy and certain of its officers and
  directors with violations of the Securities Exchange Act of
  1934. Key Energy is the world's largest rig-based, onshore well
  service company. The Company provides diversified energy
  operations, including well servicing, contract drilling,
  pressure pumping, fishing and rental tool services and other
  oilfield services.
  
  "The complaint alleges that during the Class Period, defendants
  misrepresented the strength of Key Energy's financial results.
  Throughout the Class Period, defendants repeatedly stated that
  Key Energy's financials were strong and improving and that it
  had strengthened its competitive position to benefit once market
  conditions improved. In fact, the Company's financial statements
  were materially misstated and not nearly as favorable as
  reported. As a result of defendants' misstatements, Key Energy's
  securities traded at artificially inflated levels. Defendants
  were thus able to complete a $150 million note offering in May
  2003 and to exchange 542,477 shares of Key Energy stock in the
  acquisition of Lea Fishing Tools, Inc. in September 2003.
  
  On March 15, 2004, Key Energy announced it would delay filing
  its 2003 Form 10-K so that it could review the classification of
  fixed assets during 2003. Later, on March 29, 2004, Key Energy
  announced it would be taking write-downs of $83 million to
  reflect good will impairment and would restate its prior year's
  financial statements.Then on June 7, 2004, before the market
  opened, Key Energy announced it was withdrawing earnings
  guidance for 2004. The Company also disclosed that if it failed
  to obtain a waiver for its default on its senior notes, it would
  be in default. On this news, the Company's stock collapsed to as
  low as $7.00 per share before closing at $8.67 on volume of 13.9
  million shares. This was a 37% drop from the Class Period high
  of $13.96."
  
  It appears that Congressman Pearce had prior knowledge of the Key Energy situation. What happened to the Key Energy stock Pearce had in his possession after the Lea Fishing deal? Pearce should EXPLAIN the whole transaction! He made a fortune on a dubious stock transaction.
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• 

  barbwire

  10 months ago

  Everybody knows that the House Committee on Standards and Official Conduct is a toothless and cowardly body when it comes to policing its own. I wish the writer of this story would be half as interested in facts like those raised by commenter hemingway as he is in jumping to the defense of the ethics-challenged Pearce. Strange, that, isn't it?
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