In re UNITED PARCEL

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11328 / November 22, 2024 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101702 / November 22, 2024 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4542 / November 22, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22327 
 
In the Matter of 
 
UNITED PARCEL 
SERVICE, INC.  
 
Respondent. 
 
 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTION 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING A 
CEASE-AND-DESIST ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”), against United Parcel Service, Inc. (“UPS” or “Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 
the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order 
(“Order”), as set forth below.   

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III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
 
Summary  
1. This matter concerns UPS’s failures 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.  
2. In 2019, UPS’s corporate strategy group conducted a months-long analysis of one 
of the company’s worst performing business units, UPS Freight.  Although UPS was carrying the 
business on its balance sheet at $1.4 billion, the 2019 analysis, which was available prior to the 
company’s annual goodwill impairment test, concluded 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.  An impairment in that amount would have materially reduced UPS’s 
earnings, goodwill balances, and shareowners’ equity. 
3. However when conducting the goodwill impairment testing required by Generally 
Accepted Accounting Principles in 2019, UPS ignored the company’s own assessment of Freight’s 
fair value.  Instead it relied on valuation estimates 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.  For example, UPS did not inform the consultant that its internal 
analysis had concluded 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.  Using financial information and assumptions provided or approved by 
UPS, the consultant valued Freight at about $2 billion.  It was clear that the consultant’s valuation 
was based on assumptions a prospective buyer would not make in valuing Freight, and therefore 
did not produce a fair value estimate determined in accordance with GAAP.  Nevertheless, UPS 
relied on this valuation and did not record a goodwill impairment.   
4. UPS decided to seek a sale of Freight in 2020.  In October 2020, UPS executed a 
non-binding term sheet with a prospective buyer to sell Freight for $800 million subject to various 
adjustments that were likely to reduce the final price.  Yet when conducting the goodwill 
impairment test for 2020, UPS did not consider this proposed transaction when valuing Freight.  
Instead UPS relied again on the consultant’s valuation of Freight without informing the consultant 
of the terms of the sale transaction the company was pursuing.  As in 2019, the consultant again 
valued Freight at about $2 billion using financial information and assumptions provided or 
approved by UPS that market participants would not make, and thus did not reflect Freight’s fair 
value. 
5. 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 
 
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  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 

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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.  
Instead, these disclosures were based on UPS’s conclusion that the goodwill for its Freight 
business was not impaired when the company had reliable information that it was.  Had UPS 
complied with GAAP by valuing Freight using assumptions market participants would use and 
recognized the resulting goodwill impairment, its reported earnings, goodwill balances, and 
shareowners’ equity would have been materially lower during the relevant period.  UPS did not 
disclose or otherwise inform investors of these material facts.   
6. UPS finally concluded that Freight’s goodwill was impaired in the fourth quarter of 
2020, when the company wrote off the goodwill after reaching an agreement to sell Freight for a 
net price of about $650 million.  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 percent, its 
goodwill balances by about 13 percent, and its shareowners’ equity by about 32 percent.     
7. In addition, UPS made false and misleading disclosures during this period about its 
goodwill impairment testing.  For example, in the third quarter of 2020, while UPS was in 
negotiations to sell Freight for hundreds of millions of dollars below its carrying value, the 
company falsely claimed in a Form 10-Q that there had been “no events or changes in 
circumstances” that would indicate Freight’s goodwill may be impaired.   
8. As a result of this misconduct, UPS engaged in conduct that materially misled 
investors and failed to comply with its reporting, books and records, internal accounting controls, 
internal control over financial reporting, and disclosure controls and procedures obligations. 
Respondent 
9. UPS, a Delaware corporation headquartered in Atlanta, Georgia, is a package 
delivery company and provides supply chain management products and services.  UPS’s stock is 
registered under Section 12(b) of the Exchange Act and trades on the New York Stock Exchange.      
Background 
UPS’s Failures to Properly Value the Freight Business 
UPS’s Internal Analysis of Freight 
10. In mid-2019, UPS’s corporate strategy group, which included the company’s 
mergers and acquisitions specialists, worked with external financial advisors on a months-long 
evaluation of whether UPS should sell Freight, a business unit that had been underperforming the 

4 
 
company’s expectations.  That analysis concluded Freight would likely sell for between $350 
million and $650 million.   
11. This estimate was considerably less than the $1.4 billion carrying value UPS had 
ascribed to Freight.
2
  The corporate strategy group concluded that a sale at that price would require 
UPS to recognize an impairment of all the goodwill associated with Freight (about $500 million) 
on its balance sheet and record a material charge to income.    
12. Though UPS decided not to sell Freight at that time, its analysis of what Freight’s 
sale price was likely to be should have been considered in the company’s goodwill impairment 
testing under GAAP.  Accounting Standards Codification 350 (Intangibles – Goodwill and Other) 
requires entities testing goodwill to compare the carrying value of the reporting unit to its fair 
value.  Fair value is the price that would be received to sell an asset or transfer a liability in an 
orderly transaction between market participants at the measurement date under current market 
conditions.
3
   
13. If the carrying value of a reporting unit that includes goodwill exceeds the fair 
value, GAAP requires the entity to record an impairment loss in an amount equal to that excess or 
the entire goodwill balance, whichever is lower.  The impairment loss is recorded as a charge to 
income in the current period and thus can have a significant impact on an entity’s financial results, 
including its earnings and shareowners’ equity.     
14. Because UPS’s analysis of Freight reflected a range of likely sale prices that were 
well below the business’s carrying value, it reflected that Freight’s goodwill was impaired and that 
UPS should have recorded an impairment loss with respect to Freight’s goodwill.  However UPS 
did not record an impairment at that time because it did not use its analysis of Freight’s likely sale 
prices, which it determined using assumptions market participants would use, in its goodwill 
impairment testing.  
UPS’s 2019 Goodwill Impairment Test 
15. Prior to 2019, UPS had engaged a valuation consultant to prepare valuation 
estimates for Freight as part of its goodwill impairment testing.  UPS used a valuation consultant 
again to prepare a valuation estimate for Freight in 2019.
 4
  UPS knew or should have known, 
however, that the consultant’s conclusions in 2019 would not reflect Freight’s fair value because 
 
2
  Freight’s carrying value equaled the value of the business’s assets on UPS’s balance sheet (including 
goodwill) minus its liabilities. 
3
  ASC 350 provides that fair value shall be determined in accordance with ASC 820 (Fair Value 
Measurement).  As explained in ASC 820, the term “fair value” is synonymous with a sale or exit price.  ASC 820 
further provides that the fair value determination shall be based on “assumptions market participants would use in 
pricing the asset or liability.” 
4
  UPS tested Freight’s goodwill balance for impairment annually, using an effective date of July 1, but the 
actual impairment testing occurred in the months following that date.  UPS’s external valuation consultant would 
prepare fair value estimates and provide UPS with a draft valuation report prior to the company’s filing of its third 
quarter Form 10-Q.  After review and comment by UPS, the consultant would issue a final report late in the fourth 
quarter or early the next calendar year.         

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the consultant’s assumptions, which UPS provided or approved, differed substantially from those 
market participants would use to value the business.  
16. The valuation consultant used two valuation methods for its work:  the discounted 
cash flow (“DCF”) method, which calculates the present value of a business’s future cash flows, 
and the “Guideline Public Company” (“GPC”) method, which derives a valuation by comparing 
the entity to similar public companies.  Using these two methods, the valuation consultant 
estimated that Freight’s value was about $2 billion—more than three times the high end of UPS’s 
expected sale price range for Freight.       
17. The valuation consultant’s DCF calculation did not reflect Freight’s fair value for 
several reasons.  First, the consultant assumed a higher profit margin for Freight than market 
participants would.  UPS had internally allocated costs between Freight and a sister business unit in 
a way that allowed Freight to consistently generate about a 16% profit margin on its most 
important service.  Absent this cost allocation arrangement, Freight would have been significantly 
less profitable.  Though UPS’s corporate strategy group had determined a third party buyer of 
Freight would not benefit from the same cost allocation arrangement, and would therefore earn a 
substantially lower profit from this service, the financial data UPS gave the valuation consultant 
did not reflect this conclusion.   
18. In addition, the financial data UPS gave the valuation consultant did not include 
other costs a third party buyer would incur to operate Freight as a stand-alone entity.  The data 
UPS gave the consultant for its DCF model included various cost savings that benefited Freight 
because it was part of the much larger UPS.  For example, Freight did not have to incur certain 
human resources, technology, financial, accounting, legal, and pension-related costs as a 
component of UPS.  Market participants would expect Freight to incur many of these costs—
which were likely to be significant—and would adjust their assumptions to take them into account 
when valuing Freight.   
19. UPS’s internal forecasts for Freight also used aggressive assumptions about 
revenue and profit growth in future years.  Although UPS’s corporate strategy group concluded a 
prospective buyer would discount these projections by as much as 50 percent, the company did not 
reflect this conclusion in the financial data it gave the valuation consultant for use in its DCF 
model.   
20. As a result of these factors, the valuation consultant’s DCF valuation was not based 
on the likely assumptions market participants would use in valuing Freight, and therefore did not 
reflect the price UPS would receive for Freight in an orderly transaction between market 
participants.   
21. The valuation consultant’s 2019 GPC calculation also did not reflect Freight’s fair 
value.  In its selection of the peer companies it would use to estimate Freight’s value, the valuation 
consultant included multiple firms that—unlike Freight—had non-unionized workforces.  UPS 
understood the non-unionized firms had significantly higher valuation multiples than unionized 
firms like Freight.  UPS was responsible for confirming the suitability of the peer companies 
proposed by the valuation consultant.  Yet UPS did not advise the consultant to exclude the non-
unionized firms or otherwise make appropriate adjustments for the valuations of the non-unionized 

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firms even though it knew or should have known the economic characteristics of the non-unionized 
firms were not comparable to Freight for valuation purposes.  Consequently, the consultant 
included those firms in its sample and estimated Freight’s value to be about $2 billion using those 
firms as “comparables” in its GPC valuation.      
22. Though UPS knew or should have known the valuation consultant’s estimate was 
unreliable, the company used this work to conclude Freight’s goodwill was not impaired and to 
continue carrying Freight on its balance sheet at about $1.4 billion. 
UPS’s 2020 Goodwill Impairment Test 
23. In June 2020, UPS launched an initiative to evaluate its asset portfolio and 
potentially exit businesses that were not meeting the company’s expectations.  At the time, Freight 
was one of UPS’s worst performing businesses.     
24. Later that month, UPS began pursuing a sale of Freight, with the goal of 
announcing a transaction before the end of 2020.  In August 2020, UPS executives began 
negotiations with a company that had expressed interest in buying Freight.  Consistent with UPS’s 
internal analysis in 2019, the executives determined that Freight’s sale price was unlikely to exceed 
$650 million. 
25. In September 2020, UPS told the prospective buyer it was open to selling Freight 
for $900 million.  The prospective buyer made a non-binding offer to buy Freight for between 
$750 and $800 million before various adjustments to the sale price to be calculated when the 
transaction closed that were likely to reduce the net sale price.
5
   
26. In October 2020—several weeks before UPS filed its Form 10-Q for the third 
quarter of 2020—UPS and the prospective buyer signed a non-binding term sheet.  The contract 
included a “headline” price of $800 million before the future adjustments.
6
  
27. On November 3, 2020, the day after UPS filed its Form 10-Q, during a regularly 
scheduled meeting, UPS’s Board of Directors authorized management to conclude a sale of Freight 
to the prospective buyer on terms consistent with the term sheet.  Management informed the Board 
that it expected the company would write off about $500 million in goodwill for Freight at the 
close of the transaction.
7
 
 
5
  The proposed adjustments related to working capital, cash-on-hand, and various payments expected at the 
close of the transaction.       
6
  The term sheet contemplated that UPS and the buyer would sign a contract under which UPS would 
continue to provide a certain class of package transport service (as a subcontractor to the buyer) and realize a portion 
of the profits on that service. 
7
  Although GAAP required UPS to impair Freight’s goodwill when its fair value declined below its carrying 
value—regardless of whether the company was selling the business—the then-senior accountant supervising the 
impairment analysis wrongly concluded Freight’s goodwill would not be impaired until the period in which the 
company completed a sale of Freight.  There was no basis for this in GAAP.   

7 
 
28. Despite this clear evidence of Freight’s fair value, UPS did not consider the signed 
term sheet when testing goodwill for impairment as of the third quarter of 2020.
8
  Instead UPS 
relied again on its consultant to prepare a valuation estimate for Freight – but did so without 
informing the consultant of the term sheet.   
29. Moreover, like the prior year, UPS knew or should have known that the valuation 
consultant’s analysis was not based on assumptions market participants would use in valuing 
Freight.  As it had the prior year, UPS gave the consultant financial results and forecasts for Freight 
that did not reflect how market participants would evaluate the business, and, again, the consultant 
estimated Freight’s value at about $2 billion.  Based on the valuation consultant’s estimate, UPS 
concluded Freight’s goodwill was not impaired and continued carrying Freight on its balance sheet 
at about $1.3 billion.   
UPS Announces the Sale of Freight and Impairs Goodwill  
30. On January 25, 2021, UPS publicly announced that it had reached a definitive 
agreement to sell Freight for a “headline” price of $800 million.  UPS expected the net sale price 
would be about $650 million after future adjustments.  UPS also announced that it would record a 
goodwill impairment charge.  The charge reduced UPS’s income from continuing operations and 
after-tax net income for the twelve months ended December 31, 2020 by about 6 percent ($494 
million) and 20 percent ($357 million), respectively.  It also reduced the values of UPS’s aggregate 
goodwill on its balance sheet by about 13 percent and its shareowners’ equity by about 32 percent. 
UPS’s Materially Misleading Statements to Investors 
31. In 2019 and 2020, UPS made various disclosures to investors in Forms 8-K, 10-Q, 
and 10-K, as well as during earnings calls, regarding its earnings, goodwill balances, and 
shareowners’ equity that were materially misleading.  In reporting these financial statement line 
items, UPS did not inform investors that they were materially dependent on a valuation 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.  
Instead, these disclosures were based on UPS’s conclusion that the goodwill for its Freight 
business was not impaired when the company had reliable information that it was.  Had UPS 
complied with GAAP by valuing Freight using assumptions market participants would use and 
recognized the resulting goodwill impairment, its earnings, goodwill balances, and shareowners’ 
equity would have been materially lower.  UPS did not disclose or otherwise inform investors of 
these material facts. 
32. To the contrary, UPS’s public disclosures implied that the company’s goodwill tests 
were based on reliable valuations of its businesses.  In periodic filings for the third quarter and full-
year 2019, UPS disclosed that its financial statements used estimates that were based on the “most 
current and best information” available to the company, and that its impairment tests indicated 
goodwill was not impaired.  Similarly, in its Forms 10-Q for the first three quarters of 2020, UPS 
represented that its estimates “contemplate current and expected future conditions,” and that its 
 
8
  UPS’s entry into the October 2020 non-binding term sheet was a Type 1 Subsequent Event under ASC 855 
(Subsequent Events).  As such, the company should have considered the term sheet additional evidence of Freight’s 
fair value for purposes of the annual goodwill impairment testing in the third quarter of 2020.   

8 
 
impairment tests indicated goodwill was not impaired.  These statements were materially false and 
misleading:  UPS’s goodwill estimates were not based on the most current and best information 
available to it about Freight, and the company did not impair goodwill because it had failed to 
value Freight using assumptions market participants would use as GAAP required. 
33. In its Form 10-Q for the quarter ended September 30, 2020 (filed on November 2, 
2020), UPS disclosed in its Management’s Discussion and Analysis, “There were no events or 
changes in circumstances during the third quarter of 2020 that would indicate the carrying amount 
of our goodwill may be impaired as of November 2, 2020.”  This was materially false.  At that 
time, UPS was in discussions to sell Freight at a price far below its $1.3 billion carrying value.  
These discussions indicated not only that UPS’s goodwill “may be” impaired, but that it was.     
UPS Knew or Should Have Known It Was Materially Misleading Investors 
34. UPS knew or should have known the valuation consultant’s estimates for Freight 
did not fairly value Freight in accordance with GAAP and were not a reliable basis on which to 
conclude that Freight’s goodwill was not impaired, and thus that the company’s disclosures 
regarding its earnings, goodwill balances, and shareowners’ equity were materially misleading.  
UPS also knew or should have known the statements in the disclosures cited above regarding its 
estimates and its goodwill not being impaired were similarly false and misleading.  
35. A then-senior accountant at UPS supervised the company personnel performing the 
goodwill impairment testing with the support of the valuation consultant.  The senior accountant 
knew that under GAAP, a fair value estimate must be based on assumptions market participants 
would use, and that UPS was required to make adjustments to Freight’s historical financial results 
and internal forecasts when valuing the business as part of its goodwill testing to account for the 
differences in how market participants would evaluate the business for a potential bid.   
36. The then-senior accountant also knew the financial results and forecasts UPS 
provided to the valuation consultant for use in its valuation of Freight in 2019 and 2020 did not 
reflect how market participants would value Freight.  The senior accountant knew a team of UPS 
executives, including the company’s mergers and acquisitions group, had worked with an external 
financial advisor to prepare a set of financial results and forecasts that accounted for the various 
ways in which a potential buyer would evaluate Freight differently from UPS.  These reflected the 
reduced profits, additional “standalone” costs, and less aggressive growth assumptions discussed 
above.  Yet the senior accountant understood UPS did not provide this information to the valuation 
consultant.   
37. The then-senior accountant also was aware of UPS’s $350 million to $650 million 
expected sale price range for Freight as determined during the 2019 strategic assessment, and she 
knew that, weeks prior to filing its third quarter 2020 Form 10-Q, UPS had executed a non-binding 
term sheet to sell Freight for $800 million subject to various adjustments that were likely to reduce 
the final sale price.  Yet UPS did not disclose this information to the valuation consultant either.
9
        
 
9
  A UPS manager informed the valuation firm in late-August 2020 that the company was having discussions 
with a third party about a potential sale of Freight, but the manager did not share information about the sale price 
 

9 
 
38. The withheld information clearly reflected that Freight’s fair value was far below its 
$1.3 billion then-carrying value.  However the then-senior accountant did not consider UPS’s  
internal assessments regarding a likely sale price range for Freight, or the nonbinding agreement to 
sell Freight for $800 million subject to adjustments, relevant to the fair value determination.  
Instead, UPS assumed that, until it executed a binding agreement of sale, the “best evidence” of 
Freight’s fair value was the valuation consultant’s estimates – despite the fact that the financial 
results and forecasts UPS had provided to the valuation consultant in 2019 and 2020 had not been 
adjusted to reflect assumptions market participants would use in valuing Freight. 
39. UPS assumed, for purposes of its goodwill impairment testing, that a potential 
buyer of Freight would be a firm equal to UPS in scale and would integrate Freight into its 
consolidated operations as UPS had.  However there was no factual basis for this assumption.  UPS 
had concluded the buyer universe for Freight was limited and none of the potential buyers was 
even close to the size of UPS.  Accountants at UPS also had expertise in goodwill impairment 
testing under GAAP, which requires that fair value estimates be based on “current market 
conditions” rather than hypothetical scenarios under which a buyer is assumed to have the same 
characteristics as the seller.
10
           
UPS’s Insufficient Controls and Procedures 
40. UPS’s failure to impair Freight’s goodwill as required under GAAP arose, in part, 
from inadequate internal accounting controls and internal control over financial reporting.  UPS 
failed to devise and maintain controls and procedures sufficient to provide reasonable assurances 
that its accountants were appropriately considering reliable indicia of Freight’s fair value, including 
the company’s internal assessments of Freight’s likely sale price range and, in 2020, information 
regarding the negotiations to sell Freight for considerably below its carrying value. 
41. UPS’s disclosure failures arose, in part, from and reflected inadequate disclosure 
controls and procedures.  UPS failed to maintain controls and procedures designed to ensure that 
its disclosures in reports filed with the Commission relating to its earnings, goodwill balances, 
shareowners’ equity, and estimates were not materially false or misleading.   
UPS’s Violations 
42. As a result of the conduct described above, UPS violated Section 17(a)(2) and (3) 
of the Securities Act, which prohibit any person from directly or indirectly “obtain[ing] money or 
property by means of any untrue statement of a material fact or any omission to state a material 
fact necessary in order to make the statements made, in light of the circumstances under which 
they were made, not misleading,” and from “engag[ing] in any transaction, practice, or course of 
 
under discussion.  The valuation firm was unaware of the “gap” between its valuation and the much lower sale price 
until shortly before UPS announced the impending sale of Freight on January 25, 2021.  
10
  ASC 820 provides, “[t]he objective of a fair value measurement is to estimate the price at which an orderly 
transaction to sell the asset ... would take place between market participants at the measurement date under current 
market conditions.” 

10 
 
business which operates or would operate as a fraud or deceit upon the purchaser” in the offer or 
sale of securities.
11
 
 
43. UPS violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13 
and 12b-20 thereunder, which require every issuer of a security registered pursuant to Section 12 of 
the Exchange Act to file with the Commission information, documents, and annual, current, and 
quarterly reports as the Commission may require, and mandate that periodic reports contain such 
further material information as may be necessary to make the required statements not misleading. 
44. UPS violated Exchange Act Section 13(b)(2)(A), which requires reporting 
companies to make and keep books, records and accounts which, in reasonable detail, accurately 
and fairly reflect their transactions and dispositions of their assets.   
45. UPS violated Section 13(b)(2)(B), which requires all reporting companies to devise 
and maintain a system of internal accounting controls sufficient to provide reasonable assurances 
that, among other things, transactions are recorded as necessary to permit preparation of financial 
statements in accordance with GAAP.   
46. UPS also violated Exchange Act Rule 13a-15, which requires that every issuer of a 
security registered pursuant to Exchange Act Section 12 maintain disclosure controls and 
procedures as defined in Exchange Act Rule 13a-15(e), and, for issuers required to file an annual 
report pursuant to Section 13(a) or 15(d) for the prior fiscal year, internal control over financial 
reporting as defined in Rule 13a-15(f).          
Undertakings 
47. Respondent undertakes to: 
a. Cooperate fully with the Commission in any and all investigations, litigations, or 
other proceedings relating to or arising from the matters described in the Order.  In 
connection with such cooperation, Respondent shall: 
i. Produce, without service of a notice or subpoena, any and all non-privileged 
documents and other information requested by the Commission staff subject 
to any restrictions under the law of any foreign jurisdiction;  
ii. Use its best efforts to cause its officers, employees, and directors to be 
interviewed by the Commission staff at such time as the staff reasonably 
may direct;  
iii. Use its best efforts to cause its officers, employees, and directors to appear 
 
11
  Violations of Sections 17(a)(2) and (3) of the Securities Act do not require scienter.  See Aaron v. SEC, 446 
U.S. 680, 697 (1980).  During the relevant period, UPS offered and sold stock to its employees through an Omnibus 
Incentive Compensation Plan for which a Form S-8 was filed with the Commission on May 15, 2018.  The S-8 
incorporated by reference all subsequent filings by UPS under the Exchange Act, including the filings containing 
statements and omissions at issue herein. UPS also offered and sold stock to employees through an employee stock 
program in which its common stock was one of the investment options. 

11 
 
and testify without service of a notice or subpoena in such investigations, 
depositions, hearings or trials as may be requested by the Commission staff; 
and  
b. In connection with any testimony of Respondent’s officers, employees, and 
directors to be conducted at deposition, hearing, or trial pursuant to a notice or 
subpoena, Respondent: 
i. Agrees that any such notice or subpoena for Respondent’s officers’, 
employees’, and directors’ appearance and testimony may be served by 
regular or electronic mail on:  David Woodcock, Esq., Gibson, Dunn & 
Crutcher LLP, 1700 M Street N.W., Washington, DC 200036; 
[email protected].  
ii. Agrees that any such notice or subpoena for Respondent’s officers’, 
employees’, and directors’ appearance and testimony in any action pending 
in a United States District Court may be served, and may require testimony, 
beyond the territorial limits imposed by the Federal Rules of Civil 
Procedure.   
In determining whether to accept the Offer, the Commission has considered these 
undertakings. 
48. Respondent also undertakes to complete the following actions: 
a. Remedial Training.  Beginning within 90 days and ending no earlier than 36 
months after entry of this Order: 
i. UPS will cause all certified public accountants employed by the company 
who are involved in preparing, reviewing, or supervising fair value 
estimates to complete a minimum of 4 hours of annual training concerning 
the preparation of fair value estimates under ASC 820 and goodwill 
impairment testing pursuant to ASC 350, to be administered by an 
independent training provider not unacceptable to the staff of the 
Commission; and  
ii. UPS will cause all officers and employees with responsibility for UPS’s 
public disclosures, including but not limited to all members of the 
company’s Disclosure Committee, to complete a minimum of 4 hours of 
annual training concerning UPS’s public disclosure obligations required by 
the Securities Exchange Act of 1934 and the collection and assessment of 
information potentially subject to those requirements, to be administered by 
an independent training provider not unacceptable to the staff of the 
Commission.     
b. Retention of Independent Compliance Consultant. Within 30 days of the issuance 
of this Order, Respondent shall retain the services of an Independent Compliance 
Consultant (“Independent Consultant”) not unacceptable to the staff of the 

12 
 
Commission and provide a copy of this Order to the Independent Consultant.  
Respondent shall provide the Commission staff with a copy of the engagement 
letter detailing the Independent Consultant’s responsibilities, which shall include 
the reviews and reports to be made by the Independent Consultant as set forth in 
this Order. The Independent Consultant’s compensation and expenses shall be 
borne exclusively by Respondent.  
c. Independent Consultant’s Reviews.  Respondent shall require the Independent 
Consultant to:  
i. Review the company’s policies, procedures, and controls relating to: 
preparation and use of fair value estimates in connection with annual 
and interim period goodwill impairment testing; and collection and 
assessment of information concerning UPS’s public disclosure 
obligations required by the Securities Exchange Act of 1934 and the 
collection and assessment of information potentially subject to those 
requirements; and 
ii. At the end of the review, but no later than 365 days after the entry of 
this Order, submit a written report to Respondent and the Commission 
staff that shall include a description of the review performed, the names 
of the individuals who performed the review, the Independent 
Consultant’s findings and recommendations for changes or 
improvements to the disclosures, policies, and procedures, and a 
procedure for implementing the recommended changes and 
improvements.  
d. Respondent shall, within 60 days of receipt of the Independent Consultant’s report, 
adopt all recommendations contained in the report, provided, however, that within 
45 days after the date of the report, Respondent shall in writing advise the 
Independent Consultant and the Commission staff of any recommendations that it 
considers to be unduly burdensome, impractical, or inappropriate.  With respect to 
any recommendation that Respondent considers to be unduly burdensome, 
impractical, or inappropriate, Respondent need not adopt that recommendation at 
that time but Respondent shall instead propose in writing to the Independent 
Consultant and Commission staff an alternative policy or procedure designed to 
achieve the same objective or purpose as that recommended by the Independent 
Consultant, or a different timeline for implementation in light of the 
recommendation.  Respondent shall attempt in good faith to reach an agreement 
with the Independent Consultant on any recommendations objected to by 
Respondent.  Within 15 days after the conclusion of the discussion and evaluation 
by Respondent and the Independent Consultant, Respondent shall require that the 
Independent Consultant inform Respondent and the Commission staff in writing of 
the Independent Consultant’s final determination concerning any recommendation.  
At the same time, Respondent may seek approval from the Commission staff to not 
adopt the recommendations that Respondent can demonstrate to be unduly 
burdensome, impractical, or inappropriate. In the event that Respondent and the 

13 
 
Independent Consultant are unable to agree on an alternative proposal within 30 
days and the Commission staff does not agree that any proposed recommendations 
are unduly burdensome, impractical, or inappropriate, Respondent shall abide by 
the determinations of the Independent Consultant.  
e. Within 30 days of Respondent’s adoption and implementation of all of the 
recommendations in the Independent Consultant’s report that the Independent 
Consultant deems appropriate, as determined pursuant to the procedures set forth 
herein, Respondent shall certify in writing to the Independent Consultant and the 
Commission staff that Respondent has adopted and implemented all 
recommendations in the applicable report. The Commission staff may make 
reasonable requests for further evidence of compliance, and Respondent agrees to 
provide such evidence.  
f. Respondent shall cooperate fully with the Independent Consultant and shall provide 
the Independent Consultant with access to such of its files, books, records, and 
personnel as reasonably requested for the Independent Consultant’s review, 
including access by on-site inspection. To ensure the independence of the 
Independent Consultant, Respondent (1) shall not have the authority to terminate 
the Independent Consultant or substitute another independent consultant for the 
initial Independent Consultant without prior written approval of the Commission 
staff; and (2) shall compensate the Independent Consultant and persons engaged to 
assist the Independent Consultant for services rendered pursuant to this Order at 
their reasonable and customary rates.  
g. The deadlines in this Undertaking shall be counted in calendar days, except that if 
the last day falls on a weekend or federal holiday, the next business day shall be 
considered the last day.   
h. For the period of engagement and for a period of two years from completion of the 
engagement, Respondent shall not (i) retain the Independent Consultant for any 
other professional services outside of the services described in the Order; (ii) enter 
into any other professional relationship with the Independent Consultant, including 
any employment, consultant, attorney-client, auditing or other professional 
relationship; or (iii) enter, without prior written consent of the Commission staff, 
into any such professional relationship with any of the Independent Consultant’s 
present or former affiliates, employers, directors, officers, employees, or agents 
acting in their capacity as such..  
i. Respondent shall not be in and shall not have an attorney-client relationship with 
the Independent Consultant and shall not seek to invoke the attorney-client 
privilege or any other doctrine of privilege to prevent the Independent Consultant 
from transmitting any information, reports, or documents to the Commission.  
j. The reports by the Independent Consultant will likely include confidential financial, 
proprietary, competitive business or commercial information.  Public disclosure of 
the reports could discourage cooperation, impede pending or potential government 

14 
 
investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, the reports and the contents thereof are intended to remain 
and shall remain non-public, except (1) pursuant to court order, (2) as agreed to by 
the parties in writing, (3) to the extent that the Commission determines in its sole 
discretion that disclosure would be in furtherance of the Commission’s discharge of 
its duties and responsibilities, or (4) as otherwise required by law. 
k. Respondent shall certify, in writing, compliance with the undertaking(s) set forth 
above.  The certification shall identify the undertaking(s), provide written evidence 
of compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance.  The Commission staff may make reasonable requests for 
further evidence of compliance, and Respondent agrees to provide such evidence.  
The certification and supporting material shall be submitted to Rami Sibay, 
Assistant Director, Division of Enforcement, Securities and Exchange Commission, 
100 F St., NE, Washington, DC 20549, with a copy to the Office of Chief Counsel 
of the Enforcement Division, 100 F St., NE, Washington, DC 20549, no later than 
sixty (60) days from the date of the completion of the undertakings. 
Respondent may apply to the Commission staff for an extension of the deadlines described 
above before their expiration, and upon a showing of good cause by the Respondent, the 
Commission staff may, in its sole discretion, grant such extensions for whatever time 
period it deems appropriate. 
IV. 
 
In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent UPS’s Offer.  
Accordingly, it is hereby ORDERED that: 
A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 
Respondent shall cease and desist from committing or causing any violations and any future 
violations of Section 17(a)(2) and (3) of the Securities Act and Sections 13(a), 13(b)(2)(A) and 
13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.   
B. Respondent shall, within 10 days of the entry of this Order, pay a civil money 
penalty in the amount of $45 million to the Securities and Exchange Commission.  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.  
Payment must be made in one of the following ways:   
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

15 
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying UPS 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Melissa R. Hodgman, Associate Director, 
Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
20549.   
C. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 
for the penalty and interest referenced in paragraph B above.  Amounts ordered to be paid as civil 
money penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 
Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 
shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 
part of Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any 
Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 
days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this 
action and pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such 
a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 
amount of the civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related 
Investor Action" means a private damages action brought against Respondent by or on behalf of 
one or more investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding.   
D. Respondent shall comply with the undertakings enumerated in Paragraph 48 above. 
 
 By the Commission.        
 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11328 / November 22, 2024 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101702 / November 22, 2024 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4542 / November 22, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22327 

 

In the Matter of 

 

UNITED PARCEL 

SERVICE, INC.  

 

Respondent. 

 

 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING A 

CEASE-AND-DESIST ORDER 

  

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”), against United Parcel Service, Inc. (“UPS” or “Respondent”). 

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 

the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order 

(“Order”), as set forth below.   



2 

 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

Summary  

1. This matter concerns UPS’s failures 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.  

2. In 2019, UPS’s corporate strategy group conducted a months-long analysis of one 

of the company’s worst performing business units, UPS Freight.  Although UPS was carrying the 

business on its balance sheet at $1.4 billion, the 2019 analysis, which was available prior to the 

company’s annual goodwill impairment test, concluded 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.  An impairment in that amount would have materially reduced UPS’s 

earnings, goodwill balances, and shareowners’ equity. 

3. However when conducting the goodwill impairment testing required by Generally 

Accepted Accounting Principles in 2019, UPS ignored the company’s own assessment of Freight’s 

fair value.  Instead it relied on valuation estimates 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.  For example, UPS did not inform the consultant that its internal 

analysis had concluded 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.  Using financial information and assumptions provided or approved by 

UPS, the consultant valued Freight at about $2 billion.  It was clear that the consultant’s valuation 

was based on assumptions a prospective buyer would not make in valuing Freight, and therefore 

did not produce a fair value estimate determined in accordance with GAAP.  Nevertheless, UPS 

relied on this valuation and did not record a goodwill impairment.   

4. UPS decided to seek a sale of Freight in 2020.  In October 2020, UPS executed a 

non-binding term sheet with a prospective buyer to sell Freight for $800 million subject to various 

adjustments that were likely to reduce the final price.  Yet when conducting the goodwill 

impairment test for 2020, UPS did not consider this proposed transaction when valuing Freight.  

Instead UPS relied again on the consultant’s valuation of Freight without informing the consultant 

of the terms of the sale transaction the company was pursuing.  As in 2019, the consultant again 

valued Freight at about $2 billion using financial information and assumptions provided or 

approved by UPS that market participants would not make, and thus did not reflect Freight’s fair 

value. 

5. 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 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding. 



3 

 

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.  

Instead, these disclosures were based on UPS’s conclusion that the goodwill for its Freight 

business was not impaired when the company had reliable information that it was.  Had UPS 

complied with GAAP by valuing Freight using assumptions market participants would use and 

recognized the resulting goodwill impairment, its reported earnings, goodwill balances, and 

shareowners’ equity would have been materially lower during the relevant period.  UPS did not 

disclose or otherwise inform investors of these material facts.   

6. UPS finally concluded that Freight’s goodwill was impaired in the fourth quarter of 

2020, when the company wrote off the goodwill after reaching an agreement to sell Freight for a 

net price of about $650 million.  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 percent, its 

goodwill balances by about 13 percent, and its shareowners’ equity by about 32 percent.     

7. In addition, UPS made false and misleading disclosures during this period about its 

goodwill impairment testing.  For example, in the third quarter of 2020, while UPS was in 

negotiations to sell Freight for hundreds of millions of dollars below its carrying value, the 

company falsely claimed in a Form 10-Q that there had been “no events or changes in 

circumstances” that would indicate Freight’s goodwill may be impaired.   

8. As a result of this misconduct, UPS engaged in conduct that materially misled 

investors and failed to comply with its reporting, books and records, internal accounting controls, 

internal control over financial reporting, and disclosure controls and procedures obligations. 

Respondent 

9. UPS, a Delaware corporation headquartered in Atlanta, Georgia, is a package 

delivery company and provides supply chain management products and services.  UPS’s stock is 

registered under Section 12(b) of the Exchange Act and trades on the New York Stock Exchange.      

Background 

UPS’s Failures to Properly Value the Freight Business 

UPS’s Internal Analysis of Freight 

10. In mid-2019, UPS’s corporate strategy group, which included the company’s 

mergers and acquisitions specialists, worked with external financial advisors on a months-long 

evaluation of whether UPS should sell Freight, a business unit that had been underperforming the 



4 

 

company’s expectations.  That analysis concluded Freight would likely sell for between $350 

million and $650 million.   

11. This estimate was considerably less than the $1.4 billion carrying value UPS had 

ascribed to Freight.2  The corporate strategy group concluded that a sale at that price would require 

UPS to recognize an impairment of all the goodwill associated with Freight (about $500 million) 

on its balance sheet and record a material charge to income.    

12. Though UPS decided not to sell Freight at that time, its analysis of what Freight’s 

sale price was likely to be should have been considered in the company’s goodwill impairment 

testing under GAAP.  Accounting Standards Codification 350 (Intangibles – Goodwill and Other) 

requires entities testing goodwill to compare the carrying value of the reporting unit to its fair 

value.  Fair value is the price that would be received to sell an asset or transfer a liability in an 

orderly transaction between market participants at the measurement date under current market 

conditions.3   

13. If the carrying value of a reporting unit that includes goodwill exceeds the fair 

value, GAAP requires the entity to record an impairment loss in an amount equal to that excess or 

the entire goodwill balance, whichever is lower.  The impairment loss is recorded as a charge to 

income in the current period and thus can have a significant impact on an entity’s financial results, 

including its earnings and shareowners’ equity.     

14. Because UPS’s analysis of Freight reflected a range of likely sale prices that were 

well below the business’s carrying value, it reflected that Freight’s goodwill was impaired and that 

UPS should have recorded an impairment loss with respect to Freight’s goodwill.  However UPS 

did not record an impairment at that time because it did not use its analysis of Freight’s likely sale 

prices, which it determined using assumptions market participants would use, in its goodwill 

impairment testing.  

UPS’s 2019 Goodwill Impairment Test 

15. Prior to 2019, UPS had engaged a valuation consultant to prepare valuation 

estimates for Freight as part of its goodwill impairment testing.  UPS used a valuation consultant 

again to prepare a valuation estimate for Freight in 2019. 4  UPS knew or should have known, 

however, that the consultant’s conclusions in 2019 would not reflect Freight’s fair value because 

 
2  Freight’s carrying value equaled the value of the business’s assets on UPS’s balance sheet (including 

goodwill) minus its liabilities. 

3  ASC 350 provides that fair value shall be determined in accordance with ASC 820 (Fair Value 

Measurement).  As explained in ASC 820, the term “fair value” is synonymous with a sale or exit price.  ASC 820 

further provides that the fair value determination shall be based on “assumptions market participants would use in 

pricing the asset or liability.” 

4  UPS tested Freight’s goodwill balance for impairment annually, using an effective date of July 1, but the 

actual impairment testing occurred in the months following that date.  UPS’s external valuation consultant would 

prepare fair value estimates and provide UPS with a draft valuation report prior to the company’s filing of its third 

quarter Form 10-Q.  After review and comment by UPS, the consultant would issue a final report late in the fourth 

quarter or early the next calendar year.         



5 

 

the consultant’s assumptions, which UPS provided or approved, differed substantially from those 

market participants would use to value the business.  

16. The valuation consultant used two valuation methods for its work:  the discounted 

cash flow (“DCF”) method, which calculates the present value of a business’s future cash flows, 

and the “Guideline Public Company” (“GPC”) method, which derives a valuation by comparing 

the entity to similar public companies.  Using these two methods, the valuation consultant 

estimated that Freight’s value was about $2 billion—more than three times the high end of UPS’s 

expected sale price range for Freight.       

17. The valuation consultant’s DCF calculation did not reflect Freight’s fair value for 

several reasons.  First, the consultant assumed a higher profit margin for Freight than market 

participants would.  UPS had internally allocated costs between Freight and a sister business unit in 

a way that allowed Freight to consistently generate about a 16% profit margin on its most 

important service.  Absent this cost allocation arrangement, Freight would have been significantly 

less profitable.  Though UPS’s corporate strategy group had determined a third party buyer of 

Freight would not benefit from the same cost allocation arrangement, and would therefore earn a 

substantially lower profit from this service, the financial data UPS gave the valuation consultant 

did not reflect this conclusion.   

18. In addition, the financial data UPS gave the valuation consultant did not include 

other costs a third party buyer would incur to operate Freight as a stand-alone entity.  The data 

UPS gave the consultant for its DCF model included various cost savings that benefited Freight 

because it was part of the much larger UPS.  For example, Freight did not have to incur certain 

human resources, technology, financial, accounting, legal, and pension-related costs as a 

component of UPS.  Market participants would expect Freight to incur many of these costs—

which were likely to be significant—and would adjust their assumptions to take them into account 

when valuing Freight.   

19. UPS’s internal forecasts for Freight also used aggressive assumptions about 

revenue and profit growth in future years.  Although UPS’s corporate strategy group concluded a 

prospective buyer would discount these projections by as much as 50 percent, the company did not 

reflect this conclusion in the financial data it gave the valuation consultant for use in its DCF 

model.   

20. As a result of these factors, the valuation consultant’s DCF valuation was not based 

on the likely assumptions market participants would use in valuing Freight, and therefore did not 

reflect the price UPS would receive for Freight in an orderly transaction between market 

participants.   

21. The valuation consultant’s 2019 GPC calculation also did not reflect Freight’s fair 

value.  In its selection of the peer companies it would use to estimate Freight’s value, the valuation 

consultant included multiple firms that—unlike Freight—had non-unionized workforces.  UPS 

understood the non-unionized firms had significantly higher valuation multiples than unionized 

firms like Freight.  UPS was responsible for confirming the suitability of the peer companies 

proposed by the valuation consultant.  Yet UPS did not advise the consultant to exclude the non-

unionized firms or otherwise make appropriate adjustments for the valuations of the non-unionized 



6 

 

firms even though it knew or should have known the economic characteristics of the non-unionized 

firms were not comparable to Freight for valuation purposes.  Consequently, the consultant 

included those firms in its sample and estimated Freight’s value to be about $2 billion using those 

firms as “comparables” in its GPC valuation.      

22. Though UPS knew or should have known the valuation consultant’s estimate was 

unreliable, the company used this work to conclude Freight’s goodwill was not impaired and to 

continue carrying Freight on its balance sheet at about $1.4 billion. 

UPS’s 2020 Goodwill Impairment Test 

23. In June 2020, UPS launched an initiative to evaluate its asset portfolio and 

potentially exit businesses that were not meeting the company’s expectations.  At the time, Freight 

was one of UPS’s worst performing businesses.     

24. Later that month, UPS began pursuing a sale of Freight, with the goal of 

announcing a transaction before the end of 2020.  In August 2020, UPS executives began 

negotiations with a company that had expressed interest in buying Freight.  Consistent with UPS’s 

internal analysis in 2019, the executives determined that Freight’s sale price was unlikely to exceed 

$650 million. 

25. In September 2020, UPS told the prospective buyer it was open to selling Freight 

for $900 million.  The prospective buyer made a non-binding offer to buy Freight for between 

$750 and $800 million before various adjustments to the sale price to be calculated when the 

transaction closed that were likely to reduce the net sale price.5   

26. In October 2020—several weeks before UPS filed its Form 10-Q for the third 

quarter of 2020—UPS and the prospective buyer signed a non-binding term sheet.  The contract 

included a “headline” price of $800 million before the future adjustments.6  

27. On November 3, 2020, the day after UPS filed its Form 10-Q, during a regularly 

scheduled meeting, UPS’s Board of Directors authorized management to conclude a sale of Freight 

to the prospective buyer on terms consistent with the term sheet.  Management informed the Board 

that it expected the company would write off about $500 million in goodwill for Freight at the 

close of the transaction.7 

 
5  The proposed adjustments related to working capital, cash-on-hand, and various payments expected at the 

close of the transaction.       

6  The term sheet contemplated that UPS and the buyer would sign a contract under which UPS would 

continue to provide a certain class of package transport service (as a subcontractor to the buyer) and realize a portion 

of the profits on that service. 

7  Although GAAP required UPS to impair Freight’s goodwill when its fair value declined below its carrying 

value—regardless of whether the company was selling the business—the then-senior accountant supervising the 

impairment analysis wrongly concluded Freight’s goodwill would not be impaired until the period in which the 

company completed a sale of Freight.  There was no basis for this in GAAP.   



7 

 

28. Despite this clear evidence of Freight’s fair value, UPS did not consider the signed 

term sheet when testing goodwill for impairment as of the third quarter of 2020.8  Instead UPS 

relied again on its consultant to prepare a valuation estimate for Freight – but did so without 

informing the consultant of the term sheet.   

29. Moreover, like the prior year, UPS knew or should have known that the valuation 

consultant’s analysis was not based on assumptions market participants would use in valuing 

Freight.  As it had the prior year, UPS gave the consultant financial results and forecasts for Freight 

that did not reflect how market participants would evaluate the business, and, again, the consultant 

estimated Freight’s value at about $2 billion.  Based on the valuation consultant’s estimate, UPS 

concluded Freight’s goodwill was not impaired and continued carrying Freight on its balance sheet 

at about $1.3 billion.   

UPS Announces the Sale of Freight and Impairs Goodwill  

30. On January 25, 2021, UPS publicly announced that it had reached a definitive 

agreement to sell Freight for a “headline” price of $800 million.  UPS expected the net sale price 

would be about $650 million after future adjustments.  UPS also announced that it would record a 

goodwill impairment charge.  The charge reduced UPS’s income from continuing operations and 

after-tax net income for the twelve months ended December 31, 2020 by about 6 percent ($494 

million) and 20 percent ($357 million), respectively.  It also reduced the values of UPS’s aggregate 

goodwill on its balance sheet by about 13 percent and its shareowners’ equity by about 32 percent. 

UPS’s Materially Misleading Statements to Investors 

31. In 2019 and 2020, UPS made various disclosures to investors in Forms 8-K, 10-Q, 

and 10-K, as well as during earnings calls, regarding its earnings, goodwill balances, and 

shareowners’ equity that were materially misleading.  In reporting these financial statement line 

items, UPS did not inform investors that they were materially dependent on a valuation 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.  

Instead, these disclosures were based on UPS’s conclusion that the goodwill for its Freight 

business was not impaired when the company had reliable information that it was.  Had UPS 

complied with GAAP by valuing Freight using assumptions market participants would use and 

recognized the resulting goodwill impairment, its earnings, goodwill balances, and shareowners’ 

equity would have been materially lower.  UPS did not disclose or otherwise inform investors of 

these material facts. 

32. To the contrary, UPS’s public disclosures implied that the company’s goodwill tests 

were based on reliable valuations of its businesses.  In periodic filings for the third quarter and full-

year 2019, UPS disclosed that its financial statements used estimates that were based on the “most 

current and best information” available to the company, and that its impairment tests indicated 

goodwill was not impaired.  Similarly, in its Forms 10-Q for the first three quarters of 2020, UPS 

represented that its estimates “contemplate current and expected future conditions,” and that its 

 
8  UPS’s entry into the October 2020 non-binding term sheet was a Type 1 Subsequent Event under ASC 855 

(Subsequent Events).  As such, the company should have considered the term sheet additional evidence of Freight’s 

fair value for purposes of the annual goodwill impairment testing in the third quarter of 2020.   



8 

 

impairment tests indicated goodwill was not impaired.  These statements were materially false and 

misleading:  UPS’s goodwill estimates were not based on the most current and best information 

available to it about Freight, and the company did not impair goodwill because it had failed to 

value Freight using assumptions market participants would use as GAAP required. 

33. In its Form 10-Q for the quarter ended September 30, 2020 (filed on November 2, 

2020), UPS disclosed in its Management’s Discussion and Analysis, “There were no events or 

changes in circumstances during the third quarter of 2020 that would indicate the carrying amount 

of our goodwill may be impaired as of November 2, 2020.”  This was materially false.  At that 

time, UPS was in discussions to sell Freight at a price far below its $1.3 billion carrying value.  

These discussions indicated not only that UPS’s goodwill “may be” impaired, but that it was.     

UPS Knew or Should Have Known It Was Materially Misleading Investors 

34. UPS knew or should have known the valuation consultant’s estimates for Freight 

did not fairly value Freight in accordance with GAAP and were not a reliable basis on which to 

conclude that Freight’s goodwill was not impaired, and thus that the company’s disclosures 

regarding its earnings, goodwill balances, and shareowners’ equity were materially misleading.  

UPS also knew or should have known the statements in the disclosures cited above regarding its 

estimates and its goodwill not being impaired were similarly false and misleading.  

35. A then-senior accountant at UPS supervised the company personnel performing the 

goodwill impairment testing with the support of the valuation consultant.  The senior accountant 

knew that under GAAP, a fair value estimate must be based on assumptions market participants 

would use, and that UPS was required to make adjustments to Freight’s historical financial results 

and internal forecasts when valuing the business as part of its goodwill testing to account for the 

differences in how market participants would evaluate the business for a potential bid.   

36. The then-senior accountant also knew the financial results and forecasts UPS 

provided to the valuation consultant for use in its valuation of Freight in 2019 and 2020 did not 

reflect how market participants would value Freight.  The senior accountant knew a team of UPS 

executives, including the company’s mergers and acquisitions group, had worked with an external 

financial advisor to prepare a set of financial results and forecasts that accounted for the various 

ways in which a potential buyer would evaluate Freight differently from UPS.  These reflected the 

reduced profits, additional “standalone” costs, and less aggressive growth assumptions discussed 

above.  Yet the senior accountant understood UPS did not provide this information to the valuation 

consultant.   

37. The then-senior accountant also was aware of UPS’s $350 million to $650 million 

expected sale price range for Freight as determined during the 2019 strategic assessment, and she 

knew that, weeks prior to filing its third quarter 2020 Form 10-Q, UPS had executed a non-binding 

term sheet to sell Freight for $800 million subject to various adjustments that were likely to reduce 

the final sale price.  Yet UPS did not disclose this information to the valuation consultant either.9        

 
9  A UPS manager informed the valuation firm in late-August 2020 that the company was having discussions 

with a third party about a potential sale of Freight, but the manager did not share information about the sale price 

 



9 

 

38. The withheld information clearly reflected that Freight’s fair value was far below its 

$1.3 billion then-carrying value.  However the then-senior accountant did not consider UPS’s  

internal assessments regarding a likely sale price range for Freight, or the nonbinding agreement to 

sell Freight for $800 million subject to adjustments, relevant to the fair value determination.  

Instead, UPS assumed that, until it executed a binding agreement of sale, the “best evidence” of 

Freight’s fair value was the valuation consultant’s estimates – despite the fact that the financial 

results and forecasts UPS had provided to the valuation consultant in 2019 and 2020 had not been 

adjusted to reflect assumptions market participants would use in valuing Freight. 

39. UPS assumed, for purposes of its goodwill impairment testing, that a potential 

buyer of Freight would be a firm equal to UPS in scale and would integrate Freight into its 

consolidated operations as UPS had.  However there was no factual basis for this assumption.  UPS 

had concluded the buyer universe for Freight was limited and none of the potential buyers was 

even close to the size of UPS.  Accountants at UPS also had expertise in goodwill impairment 

testing under GAAP, which requires that fair value estimates be based on “current market 

conditions” rather than hypothetical scenarios under which a buyer is assumed to have the same 

characteristics as the seller.10           

UPS’s Insufficient Controls and Procedures 

40. UPS’s failure to impair Freight’s goodwill as required under GAAP arose, in part, 

from inadequate internal accounting controls and internal control over financial reporting.  UPS 

failed to devise and maintain controls and procedures sufficient to provide reasonable assurances 

that its accountants were appropriately considering reliable indicia of Freight’s fair value, including 

the company’s internal assessments of Freight’s likely sale price range and, in 2020, information 

regarding the negotiations to sell Freight for considerably below its carrying value. 

41. UPS’s disclosure failures arose, in part, from and reflected inadequate disclosure 

controls and procedures.  UPS failed to maintain controls and procedures designed to ensure that 

its disclosures in reports filed with the Commission relating to its earnings, goodwill balances, 

shareowners’ equity, and estimates were not materially false or misleading.   

UPS’s Violations 

42. As a result of the conduct described above, UPS violated Section 17(a)(2) and (3) 

of the Securities Act, which prohibit any person from directly or indirectly “obtain[ing] money or 

property by means of any untrue statement of a material fact or any omission to state a material 

fact necessary in order to make the statements made, in light of the circumstances under which 

they were made, not misleading,” and from “engag[ing] in any transaction, practice, or course of 

 
under discussion.  The valuation firm was unaware of the “gap” between its valuation and the much lower sale price 

until shortly before UPS announced the impending sale of Freight on January 25, 2021.  

10  ASC 820 provides, “[t]he objective of a fair value measurement is to estimate the price at which an orderly 

transaction to sell the asset … would take place between market participants at the measurement date under current 

market conditions.” 



10 

 

business which operates or would operate as a fraud or deceit upon the purchaser” in the offer or 

sale of securities.11 

 

43. UPS violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13 

and 12b-20 thereunder, which require every issuer of a security registered pursuant to Section 12 of 

the Exchange Act to file with the Commission information, documents, and annual, current, and 

quarterly reports as the Commission may require, and mandate that periodic reports contain such 

further material information as may be necessary to make the required statements not misleading. 

44. UPS violated Exchange Act Section 13(b)(2)(A), which requires reporting 

companies to make and keep books, records and accounts which, in reasonable detail, accurately 

and fairly reflect their transactions and dispositions of their assets.   

45. UPS violated Section 13(b)(2)(B), which requires all reporting companies to devise 

and maintain a system of internal accounting controls sufficient to provide reasonable assurances 

that, among other things, transactions are recorded as necessary to permit preparation of financial 

statements in accordance with GAAP.   

46. UPS also violated Exchange Act Rule 13a-15, which requires that every issuer of a 

security registered pursuant to Exchange Act Section 12 maintain disclosure controls and 

procedures as defined in Exchange Act Rule 13a-15(e), and, for issuers required to file an annual 

report pursuant to Section 13(a) or 15(d) for the prior fiscal year, internal control over financial 

reporting as defined in Rule 13a-15(f).          

Undertakings 

47. Respondent undertakes to: 

a. Cooperate fully with the Commission in any and all investigations, litigations, or 

other proceedings relating to or arising from the matters described in the Order.  In 

connection with such cooperation, Respondent shall: 

i. Produce, without service of a notice or subpoena, any and all non-privileged 

documents and other information requested by the Commission staff subject 

to any restrictions under the law of any foreign jurisdiction;  

ii. Use its best efforts to cause its officers, employees, and directors to be 

interviewed by the Commission staff at such time as the staff reasonably 

may direct;  

iii. Use its best efforts to cause its officers, employees, and directors to appear 

 
11  Violations of Sections 17(a)(2) and (3) of the Securities Act do not require scienter.  See Aaron v. SEC, 446 

U.S. 680, 697 (1980).  During the relevant period, UPS offered and sold stock to its employees through an Omnibus 

Incentive Compensation Plan for which a Form S-8 was filed with the Commission on May 15, 2018.  The S-8 

incorporated by reference all subsequent filings by UPS under the Exchange Act, including the filings containing 

statements and omissions at issue herein. UPS also offered and sold stock to employees through an employee stock 

program in which its common stock was one of the investment options. 



11 

 

and testify without service of a notice or subpoena in such investigations, 

depositions, hearings or trials as may be requested by the Commission staff; 

and  

b. In connection with any testimony of Respondent’s officers, employees, and 

directors to be conducted at deposition, hearing, or trial pursuant to a notice or 

subpoena, Respondent: 

i. Agrees that any such notice or subpoena for Respondent’s officers’, 

employees’, and directors’ appearance and testimony may be served by 

regular or electronic mail on:  David Woodcock, Esq., Gibson, Dunn & 

Crutcher LLP, 1700 M Street N.W., Washington, DC 200036; 

[email protected].  

ii. Agrees that any such notice or subpoena for Respondent’s officers’, 

employees’, and directors’ appearance and testimony in any action pending 

in a United States District Court may be served, and may require testimony, 

beyond the territorial limits imposed by the Federal Rules of Civil 

Procedure.   

In determining whether to accept the Offer, the Commission has considered these 

undertakings. 

48. Respondent also undertakes to complete the following actions: 

a. Remedial Training.  Beginning within 90 days and ending no earlier than 36 

months after entry of this Order: 

i. UPS will cause all certified public accountants employed by the company 

who are involved in preparing, reviewing, or supervising fair value 

estimates to complete a minimum of 4 hours of annual training concerning 

the preparation of fair value estimates under ASC 820 and goodwill 

impairment testing pursuant to ASC 350, to be administered by an 

independent training provider not unacceptable to the staff of the 

Commission; and  

ii. UPS will cause all officers and employees with responsibility for UPS’s 

public disclosures, including but not limited to all members of the 

company’s Disclosure Committee, to complete a minimum of 4 hours of 

annual training concerning UPS’s public disclosure obligations required by 

the Securities Exchange Act of 1934 and the collection and assessment of 

information potentially subject to those requirements, to be administered by 

an independent training provider not unacceptable to the staff of the 

Commission.     

b. Retention of Independent Compliance Consultant. Within 30 days of the issuance 

of this Order, Respondent shall retain the services of an Independent Compliance 

Consultant (“Independent Consultant”) not unacceptable to the staff of the 



12 

 

Commission and provide a copy of this Order to the Independent Consultant.  

Respondent shall provide the Commission staff with a copy of the engagement 

letter detailing the Independent Consultant’s responsibilities, which shall include 

the reviews and reports to be made by the Independent Consultant as set forth in 

this Order. The Independent Consultant’s compensation and expenses shall be 

borne exclusively by Respondent.  

c. Independent Consultant’s Reviews.  Respondent shall require the Independent 

Consultant to:  

i. Review the company’s policies, procedures, and controls relating to: 

preparation and use of fair value estimates in connection with annual 

and interim period goodwill impairment testing; and collection and 

assessment of information concerning UPS’s public disclosure 

obligations required by the Securities Exchange Act of 1934 and the 

collection and assessment of information potentially subject to those 

requirements; and 

ii. At the end of the review, but no later than 365 days after the entry of 

this Order, submit a written report to Respondent and the Commission 

staff that shall include a description of the review performed, the names 

of the individuals who performed the review, the Independent 

Consultant’s findings and recommendations for changes or 

improvements to the disclosures, policies, and procedures, and a 

procedure for implementing the recommended changes and 

improvements.  

d. Respondent shall, within 60 days of receipt of the Independent Consultant’s report, 

adopt all recommendations contained in the report, provided, however, that within 

45 days after the date of the report, Respondent shall in writing advise the 

Independent Consultant and the Commission staff of any recommendations that it 

considers to be unduly burdensome, impractical, or inappropriate.  With respect to 

any recommendation that Respondent considers to be unduly burdensome, 

impractical, or inappropriate, Respondent need not adopt that recommendation at 

that time but Respondent shall instead propose in writing to the Independent 

Consultant and Commission staff an alternative policy or procedure designed to 

achieve the same objective or purpose as that recommended by the Independent 

Consultant, or a different timeline for implementation in light of the 

recommendation.  Respondent shall attempt in good faith to reach an agreement 

with the Independent Consultant on any recommendations objected to by 

Respondent.  Within 15 days after the conclusion of the discussion and evaluation 

by Respondent and the Independent Consultant, Respondent shall require that the 

Independent Consultant inform Respondent and the Commission staff in writing of 

the Independent Consultant’s final determination concerning any recommendation.  

At the same time, Respondent may seek approval from the Commission staff to not 

adopt the recommendations that Respondent can demonstrate to be unduly 

burdensome, impractical, or inappropriate. In the event that Respondent and the 



13 

 

Independent Consultant are unable to agree on an alternative proposal within 30 

days and the Commission staff does not agree that any proposed recommendations 

are unduly burdensome, impractical, or inappropriate, Respondent shall abide by 

the determinations of the Independent Consultant.  

e. Within 30 days of Respondent’s adoption and implementation of all of the 

recommendations in the Independent Consultant’s report that the Independent 

Consultant deems appropriate, as determined pursuant to the procedures set forth 

herein, Respondent shall certify in writing to the Independent Consultant and the 

Commission staff that Respondent has adopted and implemented all 

recommendations in the applicable report. The Commission staff may make 

reasonable requests for further evidence of compliance, and Respondent agrees to 

provide such evidence.  

f. Respondent shall cooperate fully with the Independent Consultant and shall provide 

the Independent Consultant with access to such of its files, books, records, and 

personnel as reasonably requested for the Independent Consultant’s review, 

including access by on-site inspection. To ensure the independence of the 

Independent Consultant, Respondent (1) shall not have the authority to terminate 

the Independent Consultant or substitute another independent consultant for the 

initial Independent Consultant without prior written approval of the Commission 

staff; and (2) shall compensate the Independent Consultant and persons engaged to 

assist the Independent Consultant for services rendered pursuant to this Order at 

their reasonable and customary rates.  

g. The deadlines in this Undertaking shall be counted in calendar days, except that if 

the last day falls on a weekend or federal holiday, the next business day shall be 

considered the last day.   

h. For the period of engagement and for a period of two years from completion of the 

engagement, Respondent shall not (i) retain the Independent Consultant for any 

other professional services outside of the services described in the Order; (ii) enter 

into any other professional relationship with the Independent Consultant, including 

any employment, consultant, attorney-client, auditing or other professional 

relationship; or (iii) enter, without prior written consent of the Commission staff, 

into any such professional relationship with any of the Independent Consultant’s 

present or former affiliates, employers, directors, officers, employees, or agents 

acting in their capacity as such..  

i. Respondent shall not be in and shall not have an attorney-client relationship with 

the Independent Consultant and shall not seek to invoke the attorney-client 

privilege or any other doctrine of privilege to prevent the Independent Consultant 

from transmitting any information, reports, or documents to the Commission.  

j. The reports by the Independent Consultant will likely include confidential financial, 

proprietary, competitive business or commercial information.  Public disclosure of 

the reports could discourage cooperation, impede pending or potential government 



14 

 

investigations or undermine the objectives of the reporting requirement.  For these 

reasons, among others, the reports and the contents thereof are intended to remain 

and shall remain non-public, except (1) pursuant to court order, (2) as agreed to by 

the parties in writing, (3) to the extent that the Commission determines in its sole 

discretion that disclosure would be in furtherance of the Commission’s discharge of 

its duties and responsibilities, or (4) as otherwise required by law. 

k. Respondent shall certify, in writing, compliance with the undertaking(s) set forth 

above.  The certification shall identify the undertaking(s), provide written evidence 

of compliance in the form of a narrative, and be supported by exhibits sufficient to 

demonstrate compliance.  The Commission staff may make reasonable requests for 

further evidence of compliance, and Respondent agrees to provide such evidence.  

The certification and supporting material shall be submitted to Rami Sibay, 

Assistant Director, Division of Enforcement, Securities and Exchange Commission, 

100 F St., NE, Washington, DC 20549, with a copy to the Office of Chief Counsel 

of the Enforcement Division, 100 F St., NE, Washington, DC 20549, no later than 

sixty (60) days from the date of the completion of the undertakings. 

Respondent may apply to the Commission staff for an extension of the deadlines described 

above before their expiration, and upon a showing of good cause by the Respondent, the 

Commission staff may, in its sole discretion, grant such extensions for whatever time 

period it deems appropriate. 

IV. 

 

In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent UPS’s Offer.  

Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent shall cease and desist from committing or causing any violations and any future 

violations of Section 17(a)(2) and (3) of the Securities Act and Sections 13(a), 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.   

B. Respondent shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $45 million to the Securities and Exchange Commission.  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.  

Payment must be made in one of the following ways:   

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

http://www.sec.gov/about/offices/ofm.htm


15 

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying UPS 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Melissa R. Hodgman, Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 

20549.   

C. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the penalty and interest referenced in paragraph B above.  Amounts ordered to be paid as civil 

money penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 

Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 

shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 

part of Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any 

Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this 

action and pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such 

a payment shall not be deemed an additional civil penalty and shall not be deemed to change the 

amount of the civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related 

Investor Action" means a private damages action brought against Respondent by or on behalf of 

one or more investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.   

D. Respondent shall comply with the undertakings enumerated in Paragraph 48 above. 

 

 By the Commission.        

 

 

Vanessa A. Countryman 

Secretary