SEC Charges Newell Brands and Former CEO for Misleading Investors About Sales Performance

The Securities and Exchange Commission (SEC) has taken action against Newell Brands Inc., a Georgia-based consumer products company, and its former CEO, Michael Polk, for allegedly providing misleading information to investors regarding Newell’s core sales growth, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure used to explain the company’s underlying sales trends. Both Newell Brands Inc. and Michael Polk have agreed to settle the charges brought by the SEC.

According to the SEC’s order, during 2016 and 2017, Newell Brands Inc. and Michael Polk took actions that artificially inflated the company’s publicly disclosed core sales growth figures, which did not align with the actual, undisclosed sales trends. This allowed the company to announce favorable results in quarters that, internally, were considered disappointing due to sales shortfalls. The order highlights that Newell Brands Inc. accelerated sales into earlier quarters without sufficient disclosure and engaged in accounting practices that did not comply with Generally Accepted Accounting Principles (GAAP). Furthermore, they allegedly bypassed internal accounting controls. Collectively, these actions created a misleading impression that Newell had achieved core sales growth in line with its targets, thereby depriving investors of crucial information for an accurate understanding of the company’s genuine sales trends.

Mark Cave, Associate Director of the SEC’s Division of Enforcement, stated, “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. 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.”

The SEC’s order determines that both Newell Brands Inc. and Michael Polk violated or were responsible for violating antifraud provisions of the Securities Act of 1933, reporting provisions of the Securities Exchange Act of 1934, and Rule 100(b) of Regulation G. While neither Newell Brands Inc. nor Michael Polk admitted to or denied the SEC’s findings, they have agreed to cease and desist from violating specific provisions of the securities laws. Additionally, they will pay civil penalties, with Newell Brands Inc. facing a penalty of $12.5 million and Michael Polk a penalty of $110,000.

If you suspect your advisor mismanaged your money or committed negligence or fraud, call Sonn Law Group for a free consultation at 833-912-3000 today.