In the Matter of United Parcel Service, Inc.

Admin. Proc. File No. 3-22327

On November 22, 2024, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against United Parcel Service, Inc. (the “Respondent”). In the Order, the Commission found that UPS failed to adhere to the basic accounting principle that the “fair value” of an asset is the price that would be received to sell that asset in an orderly transaction between market participants. These failures resulted in material misrepresentations to investors regarding its earnings and other reported items and activities.

According to the Order, in 2019, UPS’s corporate strategy group concluded UPS Freight (“Freight”) was likely to sell for only about $350 million to $650 million. This reflected that the nearly $500 million of goodwill associated with Freight was impaired. According to the Order, an impairment in that amount would have materially reduced UPS’s earnings, goodwill balances, and shareowners’ equity.

The Commission found, however, when conducting the goodwill impairment testing required by Generally Accepted Accounting Principles in 2019 and 2020, UPS ignored the company’s own assessment of Freight’s fair value. Instead, it relied on a valuation estimate of $2 billion prepared by an external consultant to support the carrying value UPS had assigned to Freight without giving the consultant the information it needed to fairly value the business in 2019 and without informing the consultant of the terms of a sale transaction the company was pursuing in 2020. The Commission found that UPS relied on this valuation and did not record a goodwill impairment.

In addition, the Commission found that, in 2019 and 2020, UPS made various disclosures regarding the amount of its earnings, goodwill balances, and shareowners’ equity that were materially misleading. UPS failed to inform investors that these reported items were materially dependent on valuations for Freight that did not reflect the business’s fair value and did not fairly align with information in the company’s possession about the assumptions market participants would use in valuing Freight. Further, the Commission found that UPS made false and misleading disclosures about its goodwill impairment testing.

According to the Order, in the fourth quarter of 2020, UPS finally concluded that Freight’s goodwill was impaired, and the company wrote off the goodwill after reaching an agreement to sell Freight for a net price of about $650 million. The Commission found that the write-off reduced UPS’s fiscal year 2020 income from continuing operations by about 6%, its fiscal year 2020 net income by about 20%, its goodwill balances by about 13%, and its shareowners’ equity by about 32%.

The Commission found that, as a result of the conduct described in the Order, UPS violated Securities Act Section 17(a)(2) and (3); Exchange Act Sections 13(a) and 13(b)(2)(A) and 13(b)(2)(B) and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.

The Commission ordered the Respondent to pay a $45,000,000 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 33-11328.

The Fair Fund includes the $45,000,000 paid by the Respondent. The Fair Fund and has been deposited in a Commission-designated account at the U.S. Department of the Treasury, and any accrued interest will be added to the Fair Fund.

On June 27, 2025, the Commission issued an order appointing Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-103342.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov