Defendant Name:
Diamond Foods, Inc.
Defendant Type:
Public Company
Document Reference:
2014-4
Document Details
Legal Case Name
SEC v. Diamond Foods, Inc.
Document Name
SEC Charges Diamond Foods and Two Former Executives Following Accounting Scheme to Boost Earnings Growth
Document Date
09-Jan-2014
Document Format
Civil Proceeding
Allegation Type
Issuer Reporting and Disclosure
Document Summary
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.
Disgorgement & Penalty Information
Resolutions
Cooperation Before the Resolution
Remedial Acts or Efforts Before the Resolution
Monetary Penalties:
Civil Penalty
Individual:
$5,000,000.00
Shared: