The U.S. Securities and Exchange Commission (SEC) announced on September 10, 2024, that it charged Keurig Dr Pepper Inc. (Keurig®) with making inaccurate statements regarding the recyclability of its K-Cup® single-use beverage pods. To settle SEC’s charges, Keurig agreed to pay a $1.5 million civil penalty. SEC’s order states:
Beginning in or around 2016, Keurig performed tests of its pods at various recycling facilities, in which Keurig tracked the progress of pods throughout the recycling facilities. Keurig also sought and received feedback from recycling industry participants, including the recycling companies involved in the testing, concerning curbside recycling of pods. While the testing demonstrated that pods typically could be successfully sorted from other materials at an early stage of the process within the recycling facilities, two large recycling companies provided negative feedback concerning the commercial feasibility of curbside recycling of pods at that time. However, in Keurig’s annual reports filed with the Commission for fiscal years 2019 and 2020, Keurig stated, without qualification, that its testing with recycling facilities “validate[d] that [pods] can be effectively recycled” and did not disclose that two large recycling companies had indicated that they did not presently intend to accept pods for recycling. By not including this additional information, Keurig’s statements about the conclusion to be drawn from the testing concerning recyclability of pods were incomplete and therefore inaccurate.
According to SEC, in fiscal year 2019, sales of K-Cup pods “comprised a significant percentage of net sales of Keurig’s coffee systems business segment, and research earlier conducted by a Keurig subsidiary indicated that environmental concerns were a significant factor that certain consumers considered, among others, when deciding whether to purchase a Keurig brewing system.” SEC found that Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder. Without admitting or denying the findings in the order, Keurig agreed to a cease-and-desist order and to pay a civil penalty of $1.5 million.
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