Keurig Dr Pepper (NASDAQ:KDP) has agreed to pay a $1.5M civil penalty to settle charges by the U.S. Securities and Exchange Commission for making false statements regarding the ability to recycle K-Cup single use beverage pods.
To address environmental concerns that inhibited consumer demand for its pod style coffee makers, Keurig (KDP) stated in its annual reports for fiscal years 2019 and 2020 that testing with recycling facilities “validated that [K-cup pods] can be effectively recycled.” However, Keurig failed to disclose that two of the largest U.S. recycling companies had expressed “significant concerns to Keurig regarding the commercial feasibility of curbside recycling…and did not intend to accept them for recycling.”
“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 associate director of the Boston SEC regional office said in a statement.
By not disclosing the full findings from recycling facilities, Keurig Dr Pepper (KDP) violated Section 13(a) of the SEC Act of 1934 and Rule 13a-1 thereunder. Without admitting or denying the findings of the order, Keurig (KDP) agreed to a cease-and desist order and $1.5M civil penalty.
On the company’s website, Keurig (KDP) claims 100% of K-Cup pods are recyclable and contain the same type of plastic used in butter tubs and yogurt containers. However, the company stipulates that not all recycling facilities will that accept the polypropylene used to make the beverage pods will accept K-Cup pods.
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