Tobacco Company Settles Accounting and Internal Control Charges
Nov. 9, 2018
File No. 3-18891
November 9, 2018 - The Securities and Exchange Commission today announced that Pyxus International, Inc., which was formerly known as Alliance One International, Inc. ("AOI"), has agreed to settle charges that it violated the reporting, books and records, and internal accounting control provisions of the federal securities laws.
According to the SEC's order, managers at AOI's Kenyan subsidiary, Alliance One Tobacco (Kenya) Ltd., overrode existing controls and failed to report accounting errors to AOI. [Insert hyperlink to Order.] As a result, AOI filed materially misstated financial statements with the Commission from at least 2011 through the second quarter of 2015. These misstatements resulted from improper and insufficient accounting, processes, and control activities for inventory, deferred crop costs, and revenue transactions in Africa. AOI overstated its inventory by approximately $32 million, accounts receivable by approximately $7 million, and retained earnings by approximately $39 million. The restatement also materially impacted AOI's pre-tax income or losses.
The SEC's order finds that AOI violated reporting, books and records, and internal accounting control provisions of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act of 1934 and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The Commission ordered AOI to cease and desist from committing or causing any future violations of these provisions of the federal securities laws.
The SEC's investigation was conducted by Brittany Hamelers and Michi Harthcock, and supervised by Timothy England and Melissa Hodgman.
Michael L. Hirschfeld, George Canellos, and Shirley Liang, Milbank, Tweed, Hadley & McCloy, LLP, 212-530-5792