The Securities and Exchange Commission settled charges against Lake Success-based natural and organic food company Hain Celestial over end-of-quarter sales practices last week, with the company escaping financial penalties.
According to the SEC, Hain Celestial had offered the company’s two largest distributors incentives to meet quarterly internal sales targets between 2014 and 2016. But these incentives were not properly documented, the SEC said, and the company “lacked sufficient policies and procedures to ensure the incentives were properly documented.”
“The incentives offered by Hain included rights of return for products that spoiled or expired before they were sold to retailers, as well as cash incentives up to $500,000, substantial discounts, and extended payment terms,” the SEC said, noting how some incentives were only agreed to orally or via email.
Hain self-reported the practices to the SEC in August 2016, the SEC said. The company then delayed its financial reporting for 2016 until June 2017.
The SEC ordered the company to cease and desist from further violations. Hain Celestial neither admitted nor denied the findings, according to the SEC, but consented to the order.
The SEC said Hain “promptly self-reported” to the commission, cooperated with an investigation, and has made a number of organizational changes like adding compliance staff and creating an internal audit system.
“Hain’s actions in this regard were important in the determination not to impose a penalty,” the SEC said.
Hain also changed how it recognizes revenue, according to the SEC, by revising its policies, standardizing contract documentation, revising its review process and monitoring controls, and developing a special training program.
Some of Hain Celestial’s brands include Avalon Organics, Bearitos, Celestial Seasoning and BluePrint Organic.
