Newell Brands And Former CEO Fined For Misleading Investors About Sales Performance

Georgia-based consumer products company Newell Brands Inc. NWL has been charged by the U.S. Securities and Exchange Commission for misleading investors about its core sales growth.

"Today's order finds that Newell's former CEO issued an instruction to 'scrub' the company's accruals after he learned that the company was projecting a 'massive' and 'disappointing' miss for the quarter," said Mark Cave, Associate Director of the SEC's Division of Enforcement. 

The regulatory watchdog has charged the company's former CEO, Michael Polk, after discovering that in 2016 and 2017, Newell and Polk took actions that increased the company's publicly disclosed core sales growth in ways that were out of step with the actual undisclosed sales trends.

This allowed the company to announce "strong" or "solid" results in quarters it internally described as disappointing due to shortfalls in sales.

According to the order, Newell pulled sales forward into earlier quarters without adequate disclosure and engaged in accounting practices inconsistent with GAAP while overriding its internal accounting controls.

"Senior executives of public companies hold positions of trust, and they risk abusing the duties attendant to their offices when they reach into a company's accounting control processes as a way of making up for performance shortfalls," Cave added.

Without admitting or denying the SEC's findings, Newell and Polk agreed to pay civil penalties of $12.5 million and $110,000, respectively.

Price Action: NWL shares are trading higher by 4.43% to $9.09 on the last check Friday.