PPG agrees to settle shareholders’ suit for $25 million
PPG has agreed to pay $25 million to settle a federal class-action case that stemmed from a 2018 accounting scandal at the paints and coatings maker.
The proposed settlement has yet to be approved by a federal judge.
In a suit filed last year in the U.S. District Court for the Central District of California, shareholders said Downtown-based PPG misled them about its financial results and internal controls and its shares fell by 5% after the mistakes were disclosed.
The Securities and Exchange Commission and the U.S. attorney in Pittsburgh are investigating the case, which resulted in PPG firing its controller and restating earnings for the first quarter of 2018 and all of 2017 and 2016.
The company declined to comment on the settlement.
In court documents, PPG admits no wrongdoing.
In a filing with the SEC last year, PPG said its former controller, Mark C. Kelly, told employees to bypass internal controls and inflate profits.
In restated results for the first quarter of 2018, it said net income was $19 million less than originally reported.
Mr. Kelly, who was named in the shareholders’ lawsuit along with Michael McGarry, PPG’s chairman and CEO, and Vincent Morales, chief financial officer, was fired in May 2018. Two employees who reported to him were reassigned.
The class-action suit alleges PPG’s stock price was artificially inflated from Jan. 19, 2017, to May 10, 2018, the day Mr. Kelly was dismissed.
When the class-action suit was filed, PPG said it was “without merit.”
According to court documents, attorneys for both sides held a fullday mediation session in New York with former U.S. District Judge Layn Phillips.
The parties did not come to an agreement that day, but the judge later recommended they consider the $25 million settlement that was accepted by early May.
Attorneys for the shareholders are expected to apply for fees not to exceed 27% of the settlement fund and for reimbursement of expenses up to $735,000, according to court documents.