A securities fraud class-action lawsuit has been filed against Green Mountain Coffee Roasters Inc. in U.S. District Court in Vermont. The suit was originally brought by a whistleblower alleging accounting irregularities. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC may award between 10 percent and 30 percent of more than $1 million to any whistleblower providing “original information” leading to a successful SEC enforcement.
The investigation is focusing on certain revenue recognition practices and the relationship between Green Mountain Coffee and its fulfillment vendor, M Block & Sons, Inc., which accounted for 51 percent of the company’s accounts receivable last year. The SEC is evaluating the possibility that the company engaged in channel stuffing to hide slowed growth within the company.