NEW YORK, N.Y. – Federal regulators are investigating Tyson Foods Inc. over payments to its chair and other directors and officers.
Tyson, the largest U.S. meat producer, and owner of Lakeside Packers in Brooks, Alta., said the Securities and Exchange Commission notified the company it launched a formal probe seeking information on payments to people including John Tyson, chair and chief executive, and his father Don Tyson, a board member and former senior chair.
The company said it was co-operating fully with the SEC but was unable to predict what action the regulators might take.
Shares of Tyson fell 48 cents to $17.94 US in morning trade on the New York Stock Exchange aftyer the news was announced March 29.
Tyson is accustomed to fighting off legal issues, said Prudential analyst John McMillin.
“We do not want to minimize the SEC investigation, but it does not look that serious to us,” McMillin said in a research note to clients. “Any dealing with the SEC is not good news. And the fact that this investigation appears to have gone from informal to formal suggests that some wrongdoings may have happened, but we don’t think they are material in nature.”
The SEC’s investigation may spur Tyson to increase the number of independent directors on its board, he added. The company’s independent directors conducted a review of the matter and found that the payment amounts are not material, Tyson said in a statement.
It has been under fire recently for its buying practices. In February, a jury found that Tyson manipulated the cattle market. The lawsuit was brought by a group of cattle producers, which accused the company of using privately contracted supplies of cattle bought outside daily auctions as leverage against market prices.
The company is trying to reverse the jury’s finding and its $1.28 billion award. Tyson’s motion is still pending before the court.