Diamond Foods to pay $5 million in SEC accounting fraud charges

By Kyle Johnson,

The Securities & Exchange Commission has ordered Diamond Foods to pay $5 million after the company and two former executives were charged with trying to skew numbers reported to investors.

The charges of accounting fraud close out a two-year investigation that the company that owns Kettle Chips, Emerald Nuts and Pop Secret had been involved in attempts to "falsify costs ... boost earnings and meet estimates by stock analysts," reports the San Francisco Chronicle.

In addition to having returned $4 million in bonuses, former CEO Michael Mendes will pay $125,000, but he won't have to admit any guilt in the process, the Diamond Foods does not either.

The company had tried to hide from investors the rising cost of walnuts, which negatively affected the company's earnings.

San Francisco office SEC director Jina Choi said, "Diamond Foods misled investors on Main Street to believe that the company was consistently beating earnings estimates on Wall Street."

According to Reuters, part of the scheme involved pushing payment reports to later fiscal periods.

The resolution to the case has come while the SEC is starting to increase investigations into accounting fraud cases after spending the last few years looking into banking practices following the financial crisis.

image: Amazon



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