Chesapeake has been under intense scrutiny since April 18, when Reuters reported that McClendon had borrowed up to $1.1 billion, using his personal stake in Chesapeake wells as collateral. Chesapeake had previously disclosed the Founders Well Participation Program that allowed McClendon to buy into the wells, but the loans had not been disclosed.
In the days that followed, at least half a dozen shareholders have filed breach of fiduciary duty lawsuits against McClendon and Chesapeake's board because of the loans.
Chesapeake's stock price jumped 6 percent Tuesday to close at $19.60 after McClendon agreed to step down as chairman and he and the company agreed to end the well program 18 months early. McClendon will remain CEO and a Chesapeake director, but the company said it will seek guidance from its largest shareholders before choosing an independent chairman.
Chesapeake's stock price erased all of Tuesday's gains and then some on Wednesday when it plummeted $2.86 to $16.74 as nearly 147 million shares changed hands. The company's average volume is just more than 20 million shares per day.
While Tuesday's announcement that the company soon will have an independent director was seen as good news for some analysts and industry observers, Wednesday's revelation may have spoiled the idea.
“I want to know who the chairman will be and what his responsibilities will be before I can fully answer that question,” Argus Research analyst Phil Weiss said when asked his thoughts on the decision to create an independent chairman. “I think today's report from Reuters indicates that there are further problems with the company's governance and the activities raise additional concerns about conflicts of interest.”
MORE FROM NEWSOK
What's a hedge fund?
A hedge fund uses advanced investment strategies with the aim of generating high returns. Such funds are often set up as private investment partnerships, and are mostly unregulated because they recruit only accredited (very wealthy) investors.