The Securities and Exchange Commission today charged Keurig Dr Pepper Inc. with making inaccurate statements regarding the recyclability of its K-Cup single use beverage pods. To settle the SEC’s charges, Keurig agreed to pay a $1.5 million civil penalty.
According to the SEC’s order, in annual reports for fiscal years 2019 and 2020, Keurig stated that its testing with recycling facilities “validate[d] that [K-Cup pods] can be effectively recycled.” But Keurig did not disclose that two of the largest recycling companies in the United States had expressed significant concerns to Keurig regarding the commercial feasibility of curbside recycling of K-Cup pods at that time and indicated that they did not presently intend to accept them for recycling. In fiscal year 2019, sales of K-Cup pods comprised a significant percentage of net sales of Keurig’s coffee systems business segment, and research earlier conducted by a Keurig subsidiary indicated that environmental concerns were a significant factor that certain consumers considered, among others, when deciding whether to purchase a Keurig brewing system.
“Public companies must ensure that the reports they file with the SEC are complete and accurate,” said John T. Dugan, Associate Director of the Boston Regional Office. “When a company speaks to an issue in its annual report, they are required to provide information necessary for investors to get the full picture on that issue so that investors can make educated investment decisions.”
The SEC’s order finds that Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder. Without admitting or denying the findings in the order, Keurig agreed to a cease-and-desist order and to pay a civil penalty of $1.5 million.
The SEC’s investigation was conducted by Michael Franck, Cassandra H. Arriaza, Susan Cooke, and Michele T. Perillo of the Boston Regional Office.
