WASHINGTON, May 3 (UPI) -- The U.S. Securities and Exchange Commission has told PepsiCo it may file a civil action against two of its units, the Wall Street Journal reported Monday.
PepsiCo said its beverage and snack units may face civil litigation from the SEC for allegedly helping Kmart Holding Corp. inflate its 2001 revenue.
Actions taken by a "non-executive" employee at its Pepsi-Cola unit and another such employee at its Frito-Lay unit are the focus of SEC concern, the Purchase, N.Y., company said.
The SEC alleges that a Pepsi-Cola employee signed documents involving $3 million in payments to Kmart, allowing the retailer to improperly record the timing of the revenue. The SEC further alleges that a Frito-Lay employee signed similar documents involving $2.8 million in payments to Kmart, according to PepsiCo.
Kmart has said that it already fired all workers it determined were responsible for the improper recording of vendor allowances. It also said its financial statements for fiscal 2001 and prior years were restated to correct these improperly recorded transactions.
