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SEC charges Keurig with making inaccurate statements about recyclability of K-cup beverage pod

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The SEC charged Keurig Dr Pepper Inc. with making inaccurate statements about the recyclability of its K-cup pods in its 2019 and 2020 annual reports. To resolve these charges, Keurig agreed to pay a US$1.5 million civil penalty.

Keurig had conducted research which indicated that its pods could qualify as being recyclable if they were made of polypropylene number 5 plastic (PP5) and sold in packaging with certain specific consumer recycling instructions. By 2020, all pods manufactured by Keurig met these criteria. However, two of the largest recycling companies in the US had raised substantial concerns about the commercial feasibility of curbside recycling of pods and indicated that they did not intend to accept pods, including K-cup pods, for recycling at their plants.

Nonetheless, in its 2019 and 2020 annual reports, Keurig asserted that, through testing with recycling facilities, it had validated that its K-cup pods could be effectively recycled and failed to disclose the negative feedback from the recycling companies. K-cup pod sales comprised a notable percentage of Keurig’s coffee systems business segment in 2019, and Keurig’s research indicated that, for certain customers, environmental concerns were an important consideration when deciding whether to purchase Keurig brewing systems.

The SEC found that Keurig’s statements about the recyclability of its K-cup pods were incomplete and, therefore, inaccurate, as they failed to disclose the feedback from the recycling companies. The SEC’s order found that Keurig’s actions violated section 13(a) and rule 13a-1 of the Securities Exchange Act of 1934. Although Keurig did not admit or deny the SEC’s findings, the company consented to a cease-and-desist order and agreed to pay the civil penalty.

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