Investigation of Sealed Air Corporation

Sealed Air Corporation’s (SEE) Accounting Practices Investigated

According to allegations, in 2005, Sealed Air entered a settlement agreement in which the Company paid W.R. Grace $930 million and 18 million Sealed Air shares for its alleged responsibility in W.R. Grace’s asbestos liabilities (which were pending at the time Sealed Air acquired Cryovac from W.R. Grace & Co.). As a result of this settlement payout, Sealed Air improperly recorded a $1.49 billion income tax deduction and claimed a net operating loss with respect to its 2014 U.S. taxes. Consequently, Sealed Air was able to claim a $250 million tax refund and $275 million deferred tax asset. In February 2015, Sealed Air revealed that the IRS intended to disallow the $1.49 billion deduction in its entirety. Then, in August 2018, Sealed Air revealed that the SEC had initiated an investigation into the Company’s accounting procedures related to the tax deduction. After receiving two SEC subpoenas, in May 2019, Sealed Air created an audit committee to conduct an internal review of Sealed Air’s accounting practices that ultimately led to the termination of its CFO “for cause” and the replacement of its independent financial auditor. Finally, on August 2, 2019, the Company revealed it had received the Grand Jury Subpoena from the U.S. Attorney for the U.S. District Court for the Western District of North Carolina, suggesting the government may indict Sealed Air.

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