Petroleum refiner Andeavor agreed to pay a $20 million civil penalty for having inadequate controls over a stock buyback plan while it was discussing being acquired by Marathon Petroleum Corp., the Securities and Exchange Commission said Friday.
Andeavor, now a part of Marathon, agreed to settle the SEC charges without admitting or denying them.
According to the SEC order, the chairmen and CEOs of the two companies suspended acquisition talks for a while in 2018, and two days before they were set to resume, Andeavor's CEO ordered a $250 million stock buyback, despite a company policy prohibiting repurchases while it had material non-public information.
The SEC charged Andeavor with having faulty internal accounting controls to ensure the buyback adhered to the company policy, the order said. SEC enforcement director Stephanie Avakian said in a statement that Andeavor's board of directors "set clear lines around when the company could buy back its shares, but Andeavor failed to have a process that was reasonably designed to ensure that it stayed within those lines."
The refiner repurchased 2.6 million shares from investors at an average price of $97 a share in February and March of 2018. One month later, the two companies reached a deal that valued the stock at more than $150 a share, the SEC said.