UPS hit with $45M penalty by SEC over improper valuation

United Parcel Service Inc. will pay $45 million to settle claims by the Securities and Exchange Commission that the courier misrepresented its financial results by improperly valuing its freight business.

The company failed to follow GAAP when it evaluated its less-than-truckload operations in 2019 and 2020, the SEC said Friday in a statement. "Had UPS properly valued Freight, its earnings and other reported items would have been materially lower," the agency said.

UPS, which didn't admit or deny the findings, agreed to avoid future violations, the SEC said. The company didn't immediately respond to a request for comment from Bloomberg.

David Paul Morris/Bloomberg

The SEC's order alleges that UPS used an outside consultant to value the business without providing certain information such as the company's own internal analysis of the freight business. UPS didn't tell the consultant it had concluded that "a prospective buyer would expect Freight to generate significantly less profit after it was sold because it would no longer benefit from synergies and other cost savings it was getting as part of UPS," according to the order.

UPS sold its freight business to TFI International in 2021 for $800 million. 

Shares of UPS rose 1.1% as of 9:40 a.m. in New York.