The settlement order cited 59 transactions from 2015 to 2018 with allegedly false and misleading documentation negotiated by procurement division personnel. The SEC alleged that KHC engaged in a multi-year expense management scheme to improperly achieve publicized cost savings, which inflated the Company’s EBITDA performance metric. That said, these recent settlements are helpful in understanding the benefits of cooperation at this time. To see a meaningful increase in the frequency and nature of cooperation, the SEC would be well-served to provide even more explicit guidance on how cooperation results in improved settlement terms. We expect the SEC to continue to focus on accounting fraud and to credit companies who provide cooperation in these challenging and resource-intensive investigations. The messaging in relation to the announcement of these cases and their timing, coming in the early days of new Enforcement Director Gurbir Grewal’s tenure, is instructive. The underlying facts differed in significant ways, including with respect to the alleged involvement of senior executives, but both companies apparently received cooperation credit for their prompt and proactive remediation and cooperation with the SEC Division of Enforcement’s investigations. (“KHC”) for accounting fraud following years of alleged accounting improprieties and financial restatements at both companies. On September 2 and 3, 2021, the Securities and Exchange Commission (“SEC”) announced settlements with Pareteum Corporation (“Pareteum”) and Kraft Heinz Co.
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