Vegan foods startup Hampton Creek Inc. is currently undergoing an informal inquiry by the U.S. Securities and Exchange Commission after purchasing its own vegan mayonnaise, Just Mayo, from stores without proper disclosure.
The inquiry will determine whether Hampton Creek Inc. improperly recognized revenue from purchases made with company money and may lead to enforcement action.
“We’re aware of the informal inquiry and we’ll be sharing the facts, as opposed to the inaccuracies reported by Bloomberg,” Hampton Creek Inc. founder and CEO Josh Tetrick told Bloomberg.
According to earlier reports from Bloomberg, this buyback may have begun as early as 2014. Hampton Creek claimed at the time that these purchases were made as part of a quality assurance program, but according to data supplied to Bloomberg by Tetrick, not all of the purchases were accounted for by this program.
“We need you in Safeway buying Just Mayo and our new flavored mayos,” Caroline Love, Hampton Creek’s then director of corporate partnership, wrote in an April 2014 e-mail to contract workers. “The most important next step with Safeway is huge sales out of the gate. This will ensure we stay on the shelf to put an end to Hellmann’s factory-farmed egg mayo, and spread the word to customers that Just Mayo is their new preferred brand. :)”
Forbes reports that buyers were instructed not to wear company apparel when buying the product, and that most of the product ended up in the trash. For quality assurance programs, buyers are usually required to send the product back to headquarters.
Tetrick said in a statement that these purchases accounted for less than 0.12 percent of sales.
Hampton Creek has raised more than $220 million in funding to date and recently announced internally that it would be raising enough to value the startup at more than $1 billion in coming days and weeks. News of the inquiry could have adverse effects on the fundraising.
Just Mayo is Hampton Creek’s highest-profile product: a mayonnaise made with pea protein instead of eggs. The company also produces vegan salad dressings and cookie dough.
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Image care of Hampton Creek