Washington D.C., Sept. 10, 2024 — The Securities and Exchange Commission (SEC) has announced charges against Keurig Dr Pepper Inc. for making false and misleading statements concerning the recyclability of its widely used K-Cup single-use beverage pods. To resolve the SEC’s allegations, Keurig has agreed to pay a civil penalty of $1.5 million.
According to the SEC’s order, Keurig misrepresented the recyclability of K-Cup pods in its annual reports for fiscal years 2019 and 2020. The company stated that internal testing “validated that [K-Cup pods] can be effectively recycled.” However, these reports failed to mention that two of the nation’s largest recycling firms had voiced significant doubts to Keurig about the practical viability of curbside recycling for K-Cup pods. These firms indicated they had no intention of accepting K-Cups for recycling at their facilities.
During fiscal year 2019, K-Cup pod sales were a substantial portion of Keurig’s coffee systems business segment’s net sales. Internal research conducted by a Keurig subsidiary had previously indicated that environmental considerations were a key factor for consumers when deciding whether to invest in a Keurig brewing system. Therefore, the accuracy of recyclability claims was material to investors.
“It is crucial that public companies provide complete and accurate information in their SEC filings,” stated John T. Dugan, Associate Director of the SEC’s Boston Regional Office. “When a company addresses a specific issue in its annual report, they must disclose all necessary information so investors can fully understand the matter and make informed investment decisions.”
The SEC determined that Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1. Without admitting or denying the SEC’s findings, Keurig consented to a cease-and-desist order and the $1.5 million penalty.
The SEC’s investigation was a collaborative effort by Michael Franck, Cassandra H. Arriaza, Susan Cooke, and Michele T. Perillo of the Boston Regional Office.
Last Reviewed or Updated: Sept. 10, 2024
