Analysis Group Supports Accounting Finance and Accounting Experts’ Testimony in SEC Financial Disclosure Action
January 26, 2021
Analysis Group was retained on behalf of RPM International Inc. (RPM) in an enforcement action brought by the Securities and Exchange Commission (SEC). The SEC alleged that RPM failed to timely accrue or disclose a loss contingency related to an investigation by the General Services Administration (GSA) arising from a partially unsealed qui tam complaint in the first two quarters of RPM’s fiscal year. RPM had previously agreed to restate its financial statements for the first three quarters of the fiscal year to recognize portions of the loss contingency. The SEC alleged that RPM’s decision to restate its financial statements indicated that RPM’s previously issued financial statements were not in compliance with US generally accepted accounting principles (GAAP).
An Analysis Group team including Managing Principal Samuel Weglein, Vice Presidents John Drum and David Smith, and Managers Kramer Holle and Laszlo Jakab supported two academic affiliates who filed expert reports and testified at deposition. Professor J. Richard Dietrich (The Ohio State University) explained complicated accounting judgments required to assess whether a loss contingency exists, and opined that RPM’s decision not to accrue for or disclose a loss contingency arising from the GSA investigation was consistent with GAAP. Professor Craig Lewis (Vanderbilt University) testified that the alternative timing of the loss contingency recognition would not have been considered significant or material by a reasonable investor.
RPM reached a favorable settlement with the SEC.