WASHINGTON, Dec. 11 (Xinhua) -- A U.S. regulator said on Tuesday that it won't impose a monetary penalty on a food company since it had made self-reporting and remediation efforts to tackle its weaknesses in internal controls.
The U.S. Securities and Exchange Commission (SEC) said that sales personnel for The Hain Celestial Group, Inc. offered incentives to its distributors to promote the sale of its inventory between 2014 and 2016. However, some of the incentives were not documented properly, and others were documented only in emails.
SEC said it found loopholes regarding documentation of the incentives in Hain's internal control policies. SEC also noted that Hain's finance department was not aware of the incentive practices until May 2016.
Hain started an internal investigation after it discovered the problems and self-reported to the SEC in August 2016. The company also delayed its financial reporting for 2016.
Hain disclosed material weaknesses in its internal control of financial reporting 10 months later. The company also made a series of efforts to fix the problems, according to SEC.
"Hain's internal control failures and poor documentation of the sales incentives contributed to the delay in its financial reporting," said Carolyn Welshhans, associate director of the SEC's Division of Enforcement.
But "the terms of our final settlement take into account Hain's timely self-reporting, its cooperation during our investigation, and the significant changes it voluntarily made to its organization and to its revenue recognition practices,"
"Based upon its extensive cooperation with the SEC's investigation, which included self-reporting and remediation efforts, the SEC did not impose a monetary penalty on the company," SEC said in its announcement.
