SEC Charges PPG Industries with Fraudulent Financial Reporting
Sept. 26, 2019
FILE NO. 3-19532
September 26, 2019 - The Securities and Exchange Commission today announced settled charges against PPG Industries, Inc., a Pittsburgh-based manufacturer of paint and specialty coating materials, for fraudulent misstatements in the company's financial statements that enabled it to meet, or come closer to meeting, consensus earnings estimates. Based on the company's extensive cooperation with the SEC's investigation, which included self-reporting and remediation efforts, the SEC did not impose a monetary penalty.
The SEC's order finds that from December 2016 through April 2018, PPG failed to properly record various expense accruals and misclassified certain income as from continuing operations. As a result, PPG's income from continuing operations in its published financial results was inflated for the years ended December 31, 2016 and December 31, 2017, and for certain quarters within that period. The order further finds that PPG included its misleading financial results in press releases and in its SEC filings. PPG restated its financial statements for the relevant periods on June 28, 2018, disclosing fourteen instances of accounting misconduct, reducing PPG's previously reported pretax income from continuing operations for 2016 and 2017, and identifying a material weakness in PPG's internal controls over financial reporting.
The SEC's order finds that PPG violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The SEC's order requires PPG to cease and desist from further violations of the charged provisions. PPG consented to the SEC's order without admitting or denying the findings.
The SEC's continuing investigation is being conducted by Margaret D. Spillane, Nandy Celamy, and Thomas P. Smith, Jr. of the New York Regional Office, and is being supervised by Sanjay Wadhwa.