Steven Neil, the former CFO of Diamond Foods Inc., has agreed to pay $125,000 to settle a U.S. Securities and Exchange Commission (SEC) lawsuit alleging that he directed his employees to underreport the amount of money paid to walnut growers to ensure that the company hit quarterly targets for earnings per share. SEC v. Diamond Foods, Inc., No. 14-122 (U.S. Dist. Ct., N.D. Cal., order entered February 2, 2015). According to SEC, Diamond falsely reported some of its payments to walnut growers as advances for crops not yet delivered to exclude the amounts from year-end financial statements, and after an investigation into the company’s accounting practices began, Neil allegedly gave independent auditors false and incomplete information about the payment scheme.

Diamond and its former CEO, Michael Mendes, reached a deal with SEC in January 2014 to pay a $125,000 penalty along with returning more than $4 million that Mendes had received in bonuses and other benefits. Additional details on the case appear in Issues 464 and 509 of this Update.