Kraft will pay $62 million to settle SEC accounting probe

The SEC announced the formal charges and the settlement on Friday after a long-running regulatory investigation that Kraft disclosed in 2019. The company will pay $62 million as part of the settlement.

Two individuals, Kraft’s former chief operating officer Eduardo Pelleissone and former chief procurement officer Klaus Hofmann, were also personally charged for alleged misconduct in the case after fabricating an estimated 59 supplier and procurement transactions, according to the SEC’s complaint. They settled for $300,000 and $100,000, respectively. Hofmann will be barred from serving as an officer or director for five years.

“Investors rely on public companies to be 100% truthful and accurate in their public statements, especially when it comes to their financials,” SEC division of enforcement director Gurbir S. Grewal said Friday in a written statement.

Kraft did not admit to or deny the allegations as part of the settlement.

“We have fully cooperated with the SEC throughout its investigation and took prompt and extensive remedial action and proactive steps to improve our internal policies, procedures, and internal controls over financial reporting,” Kraft Heinz global chief communications officer Kathy Krenger, told CNN Business in an emailed statement Friday morning.

The company also said the bogus transactions had a maximum effect of 1% on its earnings in any reporting period, and that “internal control weaknesses” it identified as part of its internal investigation in 2019 were fully remediated in 2020.