Celsius to pay $3 million to settle SEC charges

Celsius Holdings, a popular fitness beverage company based in Boca Raton, Florida, has agreed to pay a hefty $3 million fine to resolve charges brought forth by the US Securities and Exchange Commission (SEC) regarding improper accounting practices related to stock-based awards. This settlement comes following concerns raised by the SEC concerning Celsius’ financial statements for the second and third quarters of 2021, which were found to contain significant inaccuracies due to mishandled stock-based compensation expenses.

The SEC order, dated January 17, mandates that Celsius must remit the civil penalty within ten days, with the funds designated for the US Treasury. Despite the settlement, Celsius neither admitted nor denied any wrongdoing as part of the agreement, as outlined in the SEC’s “cease-and-desist proceedings” documentation. At the time of writing, Celsius had not issued any public comment in response to the SEC’s findings.

The root of the issue lies in Celsius’ handling of stock-based compensation expenses following alterations to stock awards for departing employees and retiring board members. The SEC found that Celsius failed to accurately account for these expenses, resulting in discrepancies in the financial statements for the specified periods. This mismanagement of stock-based compensation expenses prompted the SEC’s scrutiny and subsequent enforcement action against the company.

The regulatory scrutiny and resulting fine serve as a cautionary tale for companies to ensure strict adherence to accounting standards and transparency in financial reporting. The SEC’s actions underscore the importance of accurate financial disclosures and the potential consequences of failing to comply with regulatory requirements. Celsius’ experience serves as a reminder of the significant repercussions that can arise from lapses in proper accounting practices, particularly concerning stock-based compensation expenses.

Amid these developments, Celsius continues to expand its product offerings and reach, with recent additions to its CELSIUS ESSENTIALS line in the form of Watermelon Ice and Grape Slush flavors. The company remains focused on delivering innovative and appealing products to meet consumer demands in the competitive beverage market.

In conclusion, the SEC’s enforcement action against Celsius highlights the critical importance of maintaining integrity and accuracy in financial reporting, particularly concerning stock-based compensation expenses. Companies are reminded of the necessity of compliance with regulatory standards to avoid penalties and safeguard their reputation in the marketplace. The $3 million settlement serves as a reminder of the potential consequences of accounting irregularities and emphasizes the need for companies to uphold transparent and accountable practices in their financial operations.