DALLAS – Shares of Halliburton Co. (HAL) traded as much as 7.5 percent lower on Wednesday after the oilfield services and construction company said securities regulators were investigating its practice of accounting for cost overruns on some construction projects as revenues.
The Dallas-based company said late on Tuesday that the U.S. Securities and Exchange Commission had begun a preliminary investigation and that it expected to receive a formal request for documents or a subpoena in the next few days.
Halliburton said it planned to cooperate fully with the investigation, which it believes was triggered by a New York Times article on May 22 alleging that the company adopted "aggressive" accounting policies to boost its revenues.
Shares of Halliburton dipped to $17.90 in early trading but later recovered and closed at $18.72, down 63 cents, or 3.3 percent. The stock was the seventh most actively traded on the New York Stock Exchange, with 10.6 million shares changing hands.
The accounting policies under investigation were adopted in 1998 while Vice President Dick Cheney was chief executive of Halliburton. He held that post from 1995 to 2000.
Cheney spokeswoman Jennifer Millerwise referred questions about the SEC probe to Halliburton.
The New York Times article quoted accounting specialists who said Halliburton had stretched, and may even have broken, accounting rules.
Halliburton said it believed the accounting practices under investigation are in accordance with generally accepted accounting principles for the construction industry.
Under the policy adopted in 1998, Halliburton began to recognize some of its unresolved claims against engineering and construction clients as revenue, even though the amounts of money at stake were still in dispute.
Halliburton's shares came under heavy selling pressure in December and early January, touching a 15-year low of $8.75 on Jan. 4, because of investor concerns about the company's exposure to hundreds of thousands of asbestos damages claims.
The shares subsequently recovered following repeated management reassurances that the company will not be ruined by its asbestos liabilities.