On January 9, 2014, the SEC published a litigation release regarding this matter. According to the SEC "Diamond reported higher net income and inflated earnings to exceed analysts' estimates for fiscal quarters in 2010 and 2011... Diamond Foods agreed to pay $5 million to settle the SEC's charges."

On January 9, 2014, the SEC announced that it charged San Francisco-based snack foods company Diamond Foods ("Diamond") and its former CFO Steven Neil ("Neil") in an accounting scheme to falsify walnut costs in order to boost earnings and meet estimates by stock analysts. The SEC also charged Diamond's former CEO Michael Mendes ("Mendes") for his role in the company's false financial statements filed with the SEC. According to the SEC's complaints filed in federal court in San Francisco, Neil directed the effort to fraudulently underreport money paid to walnut growers by delaying the recording of payments into later fiscal periods. By manipulating walnut costs, Diamond correspondingly reported higher net income, inflating earnings to exceed analysts' estimates for fiscal quarters in 2010 and 2011. Diamond agreed to pay $5 million to settle the SEC's charges. Mendes, who should have known that Diamond's reported walnut cost was incorrect at the time he certified the company's financial statements, also agreed to settle charges against him. The SEC's litigation continues against Neil.

On January 9, 2014, the SEC filed a complaint against Diamond Foods, Inc. ("Diamond") in the U.S. District Court for the Northern District of California. According to the SEC: "This case involves financial reporting fraud and earnings management at Diamond, a San Francisco-based snack food company. One of Diamond's businesses involved buying walnuts from its growers and selling those walnuts to retailers. As a result of a scheme by Diamond's Chief Financial Officer Steven Neil to fraudulently manipulate and delay appropriate recording of the costs paid to walnut growers, Diamond reported inflated earnings during fiscal years 2010 and 2011." Specifically, Diamond materially misstated its financial results in multiple SEC Forms 10-Q, 10-K, 8-K, and S-4 from at least February 2010 and ending in September 2011.

On January 21, 2015, Federal District Judge William H. Alsup entered final judgment against Diamond Foods, Inc. pursuant to the consent of Diamond Foods, inc.