SEC Charges Mark C. Kelly, CPA, with Earnings Management Scheme
Aug. 26, 2022
File No. 3-11096
August 26, 2022 - The Securities and Exchange Commission today announced settled charges against Mark C. Kelly, CPA, the former Controller and Principal Accounting Officer of PPG Industries, Inc. ("PPG"), a Pittsburgh-based paint and specialty coating materials manufacturer, for engaging in improper accounting practices in order to increase PPG's earnings per share (EPS) and adjusted EPS (a non-GAAP metric) so that they would meet, or come closer to meeting, consensus earnings estimates.
The SEC's order finds that, from December 2016 through April 2018, Kelly directed his subordinates to improperly record or omit recording various expense accruals and misclassified certain income from continuing operations and adjusted income from continuing operations, often in violation of generally accepted accounting principles (GAAP). As a result, according to the order, PPG's income and adjusted 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 Commission previously announced settled charges against PPG, which restated several periods of financial reporting related to the same misconduct.
The SEC's order finds that Kelly willfully violated Section 17(a)(3) of the Securities Act of 1933 and Section 13(b)(5) Securities Exchange Act of 1934 and Rule 13b2-1 thereunder, and willfully aided and abetted and caused PPG's violations of Section 17(a)(2) of the Securities Act and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder. Without admitting or denying the findings in the SEC's order, Kelly agreed to a cease-and-desist order and a civil penalty of $100,000. Kelly also agreed to be suspended from appearing and practicing before the SEC as an accountant. The order does not provide Kelly an express right to apply for reinstatement.
The SEC's investigation was conducted by Margaret Spillane, Nandy Celamy, and Richard Primoff of the New York Regional Office, and was supervised by Thomas P. Smith, Jr.