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Kraft Heinz in $62M Settlement With SEC Over Accounting Practices

Kraft Heinz agreed to a $62 million penalty to settle SEC charges tied to its financial reporting.

Kraft Heinz  (KHC) - Get Kraft Heinz Company (KHC) Report settled U.S. Securities and Exchange Commission charges that the foods giant engaged in an expense management-scheme that required it to restate several years of financial reporting. 

The SEC also charged Eduardo Pelleissone, the Pittsburgh company's former chief financial officer, and Klaus Hofmann, former chief procurement officer, with misconduct related to the scheme. 

Kraft Heinz and the two former executives did not admit or deny any wrongdoing as part of the settlement. 

Kraft Heinz agreed to a civil penalty of $62 million. Pelleissone agreed to pay a civil penalty of $300,000 as well as prejudgment interest of more than $14,000. 

And in a settlement subject to court approval, Hoffman agreed to a civil penalty of $100,000 and is barred from serving as an officer or director of a public company for five years.

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According to the SEC, Kraft Heinz failed to design and maintain effective internal accounting controls for its procurement division, resulting in finance and gatekeeping personnel overlooking evidence that expenses were being improperly accounted for. 

"Investors rely on public companies to be 100% truthful and accurate in their public statements, especially when it comes to their financials. When they fall short in this regard, we will hold them accountable," said Gurbir S. Grewal, director of the SEC's Division of Enforcement.

Kraft Heinz shares at last check were down 0.2% at $36. In late May the stock had touched a 52-week high near $45.

Last month the company reported better-than-expected second-quarter results. The company said it was emerging from the COVID-19 pandemic stronger.