# UNITED STATES OF AMERICA

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URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Ace7af69498723101

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING
File No. 3-20523

In the Matter of
The Kraft Heinz Co. and Eduardo
Pelleissone,
Respondents.

I.

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PROPOSED PLAN OF
DISTRIBUTION

OVERVIEW

1.
The Division of Enforcement submits this Proposed Plan of Distribution (the
“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant
to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the
“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair
Fund (the “Fair Fund”), comprised of disgorgement, prejudgment interest, and civil money
penalties paid by The Kraft Heinz Co. (“KHC”) and Eduardo Pelleissone (collectively, the
“Respondents”) in the above-captioned matter.1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondents’ conduct described in the Order, in connection with a
multi-year expense management scheme. As calculated using the methodology detailed in the
Plan of Allocation (attached as Exhibit A), investors will be compensated for their losses on
shares of KHC common stock (the “Security”) that were purchased or acquired between
February 26, 2016 and February 21, 2019, inclusive (the “Relevant Period”). In the view of the
Commission staff and the Fund Administrator, this methodology constitutes a fair and reasonable
allocation of the Fair Fund.
3.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission
retains jurisdiction over its implementation.

II.
1

BACKGROUND

See Corrected 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, Securities Act Rel. No. 10977 (Sept. 3, 2021) (the “Order”).

4.
On September 3, 2021, the Commission issued the Order instituting and
simultaneously settling cease-and-desist proceedings against the Respondents. In the Order, the
Commission found that from the last quarter of 2015 to the end of 2018, KHC engaged in
various types of accounting misconduct, including recognizing unearned discounts from
suppliers and maintaining false and misleading supplier contracts, which improperly reduced the
company's cost of goods sold and allegedly achieved “cost savings.” KHC, in turn, touted these
purported savings to the market, which were widely covered by financial analysts. The
accounting improprieties resulted in KHC reporting inflated adjusted “EBITDA,” a key earnings
performance metric for investors. KHC failed to design and maintain effective internal
accounting controls for its procurement division. As a result, finance and gatekeeping personnel
repeatedly overlooked indications that expenses were being improperly accounted for. In total,
the Commission ordered the Respondents to pay $12,500 in disgorgement, $1,711.31 in
prejudgment interest, and $62,300,000 in civil money penalties, for a collective total of
$62,314,211.31, to the Commission. The Commission also created the Fair Fund, pursuant to
Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid, along with the
disgorgement and interest paid, can be distributed to harmed investors.2
5.
The Respondents have paid in full. The Fair Fund has been deposited at the
United States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for investment.
III.

DEFINITIONS
As used in this Plan, the following definitions will apply:

6.
“Administrative Costs” means any administrative costs and expenses, including
without limitation the fees and expenses of the Tax Administrator and the Fund Administrator,
tax obligations, bond premium expenses, and investment and banking costs.
7.
“Claim Form” means the form designed by the Fund Administrator, in
consultation with the Commission staff, for the filing of claims in accordance with this Plan.
The claim form will require, at a minimum, sufficient documentation reflecting any Preliminary
Claimant’s purchases and dispositions of the Security during the Relevant Period such that
eligibility under the Plan can be determined, tax identification and other related information from
the Preliminary Claimant as determined necessary by the Fund Administrator in coordination
with the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded
Party.
8.
“Claim Status Notice” means the notice sent by the Fund Administrator within
one hundred twenty (120) days of the Claims Bar Date to any Preliminary Claimant that
submitted a deficient Claim Form. The Claim Status Notice will provide to each Preliminary
Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency and in the
event the claim is denied, the Claim Status Notice will state the reason(s) for such denial. The
Claim Status Notice will also notify the Preliminary Claimant of the opportunity to cure any
2

In addition, $100,000 in civil penalties paid in a related civil action, SEC v. Hofmann, 21-CV-7407 (S.D.N.Y.) has
been added to the Fair Fund, pursuant to an Order of the Court upon motion by the Commission. Docket No. 13.

2

deficiency, request reconsideration, or dispute the determination made by the Fund
Administrator and provide instructions regarding what is required to do so.
9.
“Claims Bar Date” means the date established in accordance with this Plan by
which a Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in
order to receive consideration under the Plan. The Claims Bar Date shall be one hundred twenty
(120) days after the initial mailing of the Plan Notice. Claim Forms submitted by Preliminary
Claimants postmarked or received after the Claims Bar Date will not be accepted unless the Fund
Administrator is directed to do so by the Commission staff.
10.
“Claims Packet” means the materials relevant to submitting a claim that will be
provided to Preliminary Claimants who request such materials prior to the Claims Bar Date. The
Claims Packet will include, at a minimum, a copy of the Plan Notice and a Claim Form (together
with instructions for completion of the Claim Form).
11.
“Determination Notice” shall mean the written notice sent by the Fund
Administrator to all Preliminary Claimants who timely submitted a Claim Form notifying the
Preliminary Claimant of its eligibility determination. The Determination Notice will further
provide each Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or
its calculated Recognized Loss. The Determination Notice will constitute the Fund
Administrator’s final ruling regarding the status of the claim.
12.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
13.
“Eligible Claimant” means a Preliminary Claimant, who is not an Excluded
Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in
accordance with the Plan of Allocation.
14.

“Excluded Party” shall mean:
(a)

The Respondents in this matter and the defendant in SEC v. Hofmann,
21-CV-7407 (SDNY);

(b)

Any Person who served at any time from July 2, 2015 through the end of
the Relevant Period as an officer3 or director of KHC;

(c)

Any employee or former employee of KHC or any of its affiliates who has
been disciplined, terminated, or has otherwise resigned, in connection with
the conduct described in the Order;

(d)

Any Person employed within the procurement division at KHC at any time
from July 2, 2015 through the end of the Relevant Period;

An “officer” excluded under this paragraph is any officer of KHC required to file a Form 3, 4, or 5 with the
Commission pursuant to Section 16 of the Securities Exchange Act of 1934 to report transactions in the Security
during the Relevant Period.
3

3

(e)

Any Person who, as of the Claims Bar Date, has been the subject of
criminal charges related to the conduct described in the Order or any
related Commission action;

(f)

Any firm, trust, corporation, officer, or other entity in which Respondents
has or had a controlling interest;

(g)

Any Person, firm, trust, corporation, or other entity that beneficially
owned more than 20% of KHC common stock at any time from July 2,
2015 through the end of the Relevant Period;

(h)

The Fund Administrator, its employees, and those Persons assisting the
Fund Administrator in its role as the Fund Administrator;

(i)

Any assigns, creditors, heirs, distributees, spouses, parents, dependent
children or controlled entities of any of the foregoing Persons or entities in
Paragraph 14(a)-(h) above; or

(j)

Any purchaser or assignee of another Person’s right to obtain a recovery
from the Fair Fund for value; provided, however, that this provision shall
not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.

The Claim Form will require claimants to certify that they are not an Excluded Party. All
Excluded Parties will be deemed ineligible to participate in the distribution of the Fair Fund.
15.
“Fair Fund” means the fund created by the Commission pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’
violations described in the Order.
16.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
17.
“Payee” means an Eligible Claimant whose Recognized Loss calculates, in
accordance with the Plan of Allocation, to a distribution amount equal to or greater than $10.00
who will receive a Distribution Payment.
18.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
19.
“Plan Notice” means a written notice from the Fund Administrator to Preliminary
Claimants informing them of the Fair Fund; the Plan and its eligibility requirements; explaining
how to submit a claim, including instructions for any online claims process; and how to obtain a
copy of the approved Plan and Claim Form by request or from the Fair Fund’s website. The Plan
Notice will also be available on the Fair Fund’s website that is maintained by the Fund
4

Administrator.
20.
“Plan of Allocation” means the methodology used by the Fund Administrator to
calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
21.
“Preliminary Claimant” shall mean a Person, or their lawful successors,
identified by the Fund Administrator as having possible claim to recover from the Fair Fund
under this Plan, or a Person asserting prior to the Claims Bar Date that he, she, or it has a
possible claim to recover from the Fair Fund under this Plan.
22.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
23.
“Relevant Period” means the period of time between February 26, 2016 and
February 21, 2019, inclusive.
24.
“Security” refers to shares of Kraft Heinz Company common stock listed on a
U.S. exchange and registered with the Commission and traded under the symbol KHC during the
Relevant Period.
25.
“Summary Notice” means the notice published in print or internet media that
shall include, at a minimum, a statement of the purpose of the Fair Fund and the Plan, the means
of obtaining a Claims Packet, and the Claims Bar Date. The Summary Notice will be published
online within ten (10) days of the initial mailing of the Plan Notice.
26.
“Third-Party Filer” means a third party, including without limitation a nominee,
custodian, or an intermediary holding in street name, who is authorized to submit and submits a
claim(s) on behalf of one or more Preliminary Claimants. Third-Party Filer does not include
assignees or purchasers of claims that are excluded from receiving Distribution Payments under
paragraph 14(j) above.
IV.

TAX COMPLIANCE

27.
On December 29, 2021, the Commission appointed Miller Kaplan Arase LLP as
the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of
the Fair Fund.4 The Tax Administrator will be compensated for reasonable fees and expenses
from the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the
Commission.5
28.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
4

See Order Appointing Tax Administrator, Exchange Rel. No. 93878 (Dec. 29, 2021).
See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish
Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).
5

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administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:
(a)

Obtaining a taxpayer identification number;

(b)

Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and

(c)

Fulfilling any information reporting or withholding requirements required
for distributions from the Fair Fund.

29.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.

FUND ADMINISTRATOR

30.
On March 8, 2022, the Commission appointed RCB Fund Services LLC, as the
fund administrator for the Fair Fund (the “Fund Administrator”), and the Fund Administrator has
obtained a bond in the amount of $62,314,211.31, as ordered.6 Pursuant to Rule 1105(a) of the
Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund Administrator may be removed at any
time by order of the Commission or hearing officer.
31.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan. This will include, among other things, taking reasonable steps to
identify and contact Preliminary Claimants; obtaining mailing information for Preliminary
Claimants; establishing a website and staffing a call center to address inquiries during the claims
process; developing a claims database; preparing accountings; cooperating with the tax
administrator appointed by the Commission to satisfy any tax liabilities and to ensure
compliance with income tax reporting requirements, including but not limited to Foreign
Account Tax Compliance Act (FATCA); advising Preliminary Claimants of deficiencies in
claims and providing an opportunity to cure any documentary defects; taking antifraud measures,
such as identifying false, ineligible and overstated claims; making determinations under the
criteria established herein as to Preliminary Claimant eligibility; advising Preliminary Claimants
of final claim determinations; disbursing the Fair Fund in accordance with this Plan, as ordered
by the Commission; and researching and reconciling errors and reissuing payments, when
possible.
32.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.

6

See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 94380 (Mar. 8,
2022).

6

33.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
34.
The Fund Administrator is authorized to enter into agreements with third parties
as may be appropriate or necessary in the administration of the Fair Fund, provided such third
parties are not excluded pursuant to other provisions of this Plan. In connection with such
agreements, the third parties shall be deemed to be agents of the Fund Administrator under this
Plan.
35.
The Fund Administrator will be entitled to payment from the Fair Fund of
reasonable fees and expenses, including the bond premium, incurred in the performance of its
duties (including any such fees and expenses incurred by agents, consultants or third parties
retained by the Fund Administrator in furtherance of its duties).
VI.

ADMINISTRATION OF THE FAIR FUND
Identification of and Notification to Preliminary Claimants

36.
The Fund Administrator will, insofar as practicable, use its best efforts to
identify Preliminary Claimants from a review of trading records, obtaining records from
registered broker-dealers and investment advisors, and seeking information from any other
source available to it. The Fund Administrator may also engage a third party firm, after
consultation with and approval of the Commission staff, to assist in identifying Preliminary
Claimants to maximize the participation rate of KHC investors in the Fair Fund.
37.
Within sixty (60) days after Commission approval of the Plan, the Fund
Administrator shall:
(a)

design and submit a Claims Packet, including the Plan Notice and the
Claim Form, to the Commission staff for review and approval;

(b)

create a mailing and claim database of all Preliminary Claimants based
upon information identified by the Fund Administrator;

(c)

run a National Change of Address search to retrieve updated addresses for
all records in the database, thereby ensuring the mailing information for
Preliminary Claimants is up-to-date;

(d)

email and/or mail a Plan Notice to each Preliminary Claimant identified
by the Fund Administrator and to the Fund Administrator’s list of banks,
brokers, and other nominees in accordance with paragraph 42 below;

(e)

establish and maintain a website devoted solely to the Fair Fund. The Fair
Fund’s website, located at www.khcfairfund.com, will make available a
copy of the approved Plan; provide information regarding the claims
process and eligibility requirements for participation in the Fair Fund in
7

the form of frequently asked questions; include in downloadable form, the
Claim Form and other related materials; and such other information the
Fund Administrator believes will be beneficial to Preliminary Claimants;
(f)

establish and maintain a toll-free telephone number for Preliminary
Claimants to call to speak to a live representative of the Fund
Administrator during its regular business hours or, outside of such hours,
to hear prerecorded information about the Fair Fund. The toll-free number
will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website; and

(g)

establish and maintain a traditional mailing address and an email address
which will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website.

38.
The Fund Administrator will publish the Summary Notice on the internet and/or
in print media acceptable to Commission staff within ten (10) days of the initial mailing of the
Plan Notice.
39.
The Commission staff retains the right to review and approve any material posted
on the Fair Fund’s website, any material mailed, and any scripts used in connection with any
communication with Preliminary Claimants.
40.
In all materials that refer to the Claims Bar Date, the filing deadline will be
clearly identified with the calendar date, which is one hundred twenty (120) days from the date
of the initial mailing of the Plan Notice.
41.
The Fund Administrator will promptly provide a Plan Notice to any Preliminary
Claimant upon request made via mail, phone, or email prior to the Claims Bar Date.
42.
The Fund Administrator will send by mail, email, or other means, the Plan Notice
to the Fund Administrator’s list of banks, brokers, and other nominees, as well as any other
institutions identified during the outreach process, that may have records of the Security during
the Relevant Period (collectively, the “Nominees or Custodians”). The Fund Administrator will
request that these entities, to the extent that they were record holders for beneficial owners of the
Security:
(a)

within fourteen (14) days of the Nominees’ or Custodians’ receipt of the
Plan Notice, notify and send the Plan Notice to the respective beneficial
owners, and, as requested, provide to the beneficial owners a Plan Notice,
so that the beneficial owners may timely file a claim. The burden will be
on the Nominees or Custodians to ensure the claims process information,
including, if requested, the Plan Notice and other relevant materials, is
properly disseminated to the beneficial owners; and/or

(b)

provide to the Fund Administrator, within fourteen (14) days of receipt of
8

the Plan Notice, a list of last known names and addresses for all beneficial
owners for whom/which they purchased, as the record holder, the Security
during the Relevant Period, so that the Fund Administrator can
communicate with the beneficial owners directly.
43.
At the discretion of the Fund Administrator, in consultation with the Commission
staff, a reasonable number of additional copies of the Plan Notice shall be made available to any
Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.
44.
Requests to the Fund Administrator for additional copies of the Plan Notice are
subject to approval by the Fund Administrator, in consultation with the Commission staff.
45.
Documented reasonable out-of-pocket expenses incurred by the Nominees or the
Custodians, which would not have been incurred but for compliance with paragraph 42 above,
shall be reimbursed from the Fair Fund. The amount of such expenses allowed will be at the
discretion of the Fund Administrator, in consultation with the Commission staff. Unless
otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable:
(a)

a maximum of $0.08 per Plan Notice, plus postage at the pre-sort postage
rate per Plan Notice actually mailed;

(b)

a maximum of $0.05 per email of Summary Notice or Plan Notice and
Claim Form link disseminated; or

(c)

$0.20 per name, address, and email address provided to the Fund
Administrator, up to a maximum of amount of $1,500.00.

46.
The Fund Administrator will attempt to locate any Preliminary Claimant whose
mailing is returned as “undeliverable” and will document all such efforts. The Fund
Administrator shall use its best efforts to make use of commercially available resources and other
reasonably appropriate means to obtain updated addresses in response to “undeliverable” notices,
and forward any returned mail for which an updated address is provided or obtained. The Fund
Administrator will make available, upon request by the Commission staff, a list of all
Preliminary Claimants whose Plan Notice have been returned as “undeliverable” due to incorrect
addresses and for which the Fund Administrator has been unable to locate current addresses.
Filing a Claim
47.
To avoid being barred from asserting a claim, on or before the Claims Bar Date,
each Preliminary Claimant must submit to the Fund Administrator a properly completed Claim
Form reflecting such Preliminary Claimant’s claim, together with all required supporting
documentation as the Fund Administrator, in its discretion, deems necessary or appropriate to
substantiate the claim. Without limitation, this information may include third party documentary
evidence of purchases and dispositions of the Security during the Relevant Period, as well as
holdings of the Security at pertinent dates.
9

48.
Electronic claims submission is encouraged; the Plan Notice will include
directions on how Preliminary Claimants can submit their claims electronically via the Fair
Fund’s website. If using the web-based claim filing option, a Preliminary Claimant must submit
his, her, or its claim to the Fund Administrator by 11:59 p.m. on the Claims Bar Date. The Plan
Notice will also include directions for submission of claims if the Preliminary Claimant is unable
to submit his, her, or its claim electronically.
49.
The burden will be upon the Preliminary Claimant to ensure that his, her or its
Claim Form has been properly and timely received by the Fund Administrator. A Claim Form
that is postmarked or otherwise received after the Claims Bar Date will not be accepted unless
the deadline is extended by the Fund Administrator for good cause shown, after consultation
with the Commission staff.
50.
All Claim Forms and supporting documentation necessary to determine a
Preliminary Claimant’s eligibility to receive a distribution from the Fair Fund under the terms of
the Plan must be endorsed by a declaration executed by the Preliminary Claimant under penalty
of perjury under the laws of the United States. The declaration must be executed by the
Preliminary Claimant, unless the Fund Administrator accepts such declaration from a Person
authorized to act on the Preliminary Claimant’s behalf, whose authority is supported by such
documentary evidence as the Fund Administrator deems necessary.
51.
When submitting claims to the Fair Fund on behalf of its clients, all Third-Party
Filers must use the electronic filing template provided by the Fund Administrator in this matter.
Third-Party Filers that do not comply with the template and format provided by the Fund
Administrator may be rejected. Third-Party Filers must also submit a signed master proof of
claim and release, as well as proof of authority to file on behalf of the claimant(s) at the time the
electronic file of transactions is submitted. Failure to do so may result in rejection of the claim.
52.
Each Third-Party Filer must establish the validity and amount of each claim in its
submission. Third-Party Filers must submit such supporting documentary evidence of
purchases, dispositions, and holdings of the Security as the Fund Administrator deems necessary
or appropriate to substantiate each individual claim. Without limitation, this includes the
complete name of the Preliminary Claimant (beneficial account owner) and its TIN (for
individuals) or EIN (for companies), sufficient contact information to confirm the identity of the
beneficial owner, and documentation from the original bank, broker or other institution of
purchases and dispositions of the Security (account statements, confirmations and other
documentation of purchases and dispositions), as well as holdings of the Security on pertinent
dates. Documentation generated by the Third-Party Filer as well as affidavits in lieu of
supporting documentation will not be accepted unless, for good cause, the Fund Administrator
determines it acceptable. The Fund Administrator will have the right to request, and the ThirdParty Filer will have the burden of providing to the Fund Administrator, any additional
information and/or documentation deemed necessary by the Fund Administrator to substantiate
the claim(s) contained in the submission. Documentation from a Third-Party Filer that is not
acceptable to the Fund Administrator will result in rejection of the affected claim(s). The
determination of the Fund Administrator to reject a claim for insufficient documentation, as
10

reflected on the Final Determination Notice, is final and within the discretion of the Fund
Administrator.
53.
The receipt of the Security by gift, inheritance, devise, or operation of law will
not be deemed to be a purchase of the Security, nor will it be deemed an assignment of any claim
relating to the purchase of such Security unless specifically so provided in the instrument of
inheritance. The recipient of the Security as a gift, inheritance, devise or by operation of law will
be eligible to file a Claim Form and participate in the distribution of the Fair Fund to the extent
the original purchaser would have been eligible under the terms of the Plan. Only one claim may
be submitted with regard to the same transactions in the Security, and in cases where duplicative
claims are filed by the donor and donee, the donee claim will be honored, assuming it is
supported by proper documentation.
54.
Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29
U.S.C.§ 1002(3), which do not include Individual Retirement Accounts and such plan’s
participants, are properly made by the administrator, custodian or fiduciary of the plan and not
by the plan’s participants. The Fund Administrator will distribute any payments on such claims
directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or
fiduciary of the retirement plan will distribute any payments received in a manner consistent with
its fiduciary duties and the governing account or plan provisions.
55.
The Preliminary Claimant has the burden of notifying the Fund Administrator of a
change in his, her or its current address and other contact information, and of ensuring that such
information is properly reflected on the Fund Administrator's records.
Claims Review Process
56.
The Fund Administrator will review all claim submissions and determine the
eligibility of each Preliminary Claimant to participate in the Fair Fund by reviewing claim data
and supporting documentation (or the lack thereof) and verifying the claim. Each Preliminary
Claimant will have the burden of proof to establish the validity and amount of his, her or its
claim. The Fund Administrator will have the right to request, and the Preliminary Claimant will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed relevant by the Fund Administrator.
57.
The Fund Administrator will provide a Claim Status Notice within one hundred
twenty (120) days of the Claims Bar Date to each Preliminary Claimant who has filed a deficient
Claim Form with the Fund Administrator. The Claim Status Notice will provide to each
Preliminary Claimant whose claim is deficient, in whole or in part, the reason(s) for the
deficiency (e.g., failure to provide required information or documentation). In the event the
claim is denied, in whole or in part, the Claim Status Notice will state the reason(s) for such
denial. The Claim Status Notice will also notify the Preliminary Claimant of the opportunity to
cure any deficiency, request reconsideration, or dispute the determination made by the Fund
Administrator and provide instructions regarding what is required to do so.
58.

Any Preliminary Claimant with a deficient claim will have thirty (30) days from
11

the date of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice.
59.
Any Preliminary Claimant seeking reconsideration of a denied claim must advise
the Fund Administrator in writing within thirty (30) days of the date of the Claim Status Notice.
All requests for reconsideration must include the necessary documentation to substantiate the
basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.
60.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims.
All determinations made by the Fund Administrator in accordance with the Plan in any dispute,
request for reconsideration, or request to cure a deficient claim will be final and not subject to
appeal.
Claims Eligibility Determination
61.
Within two hundred ten (210) days of the Claims Bar Date, the Fund
Administrator will complete all claims determinations and send a Determination Notice to all
Preliminary Claimants who submitted a Claim Form notifying the Preliminary Claimant of its
eligibility determination. The Determination Notice will further provide each Preliminary
Claimant that is determined to be an Eligible Claimant with his, her, or its calculated Recognized
Loss. The Determination Notice will constitute the Fund Administrator’s final ruling regarding
the eligibility status of the claim.
62.
The Fund Administrator may consider disputes of an Eligible Claimant’s
Recognized Loss calculation if notice of the dispute is presented in writing to the Fund
Administrator within thirty (30) days of the date of the Determination Notice. The Fund
Administrator will consult Commission staff as appropriate. Within sixty (60) days of the
receiving an Eligible Claimant’s notice of dispute, the Fund Administrator will notify the
Eligible Claimant, in writing, of its calculation of the Eligible Claimant’s Recognized Loss after
considering the dispute. This notice will constitute the Fund Administrator’s final ruling
regarding the loss calculations for the claim.
Third Party Review
63.
After the Fund Administrator has completed the process of analyzing the claims
and determining claim amounts in accordance with the Plan, and prior to the distribution of any
funds, the Fund Administrator will engage an independent, third party firm, not unacceptable to
Commission staff, to perform a set of agreed upon procedures, review a statistically significant
sample of claims and ensure accurate and comprehensive application of the Plan of Allocation.
The Fund Administrator will communicate the results of the review to Commission staff together
with any written analysis or reports related to the review, and, upon request, will make the firm
available to the Commission staff to respond to questions concerning the review.

Distribution Methodology
12

64.
Any Preliminary Claimant, who is not an Excluded Party, who submitted a valid
Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of
Allocation, will be deemed an Eligible Claimant.
65.
No Distribution Payments will be made for less than $10.00. If an Eligible
Claimant’s Recognized Loss, in accordance with the Plan of Allocation, calculates to a
distribution amount less than $10.00, that Eligible Claimant will be deemed ineligible to receive
a Distribution Payment and his, her, or its distribution amount will be reallocated on a pro-rata
basis to Eligible Claimants whose distribution amounts are greater than or equal to $10.00. All
Eligible Claimants whose Recognized Loss calculates in accordance with the Plan of Allocation,
to a distribution amount equal to or greater than $10.00 will deemed a Payee and receive a
Distribution Payment.
Establishment of a Reserve
66.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
67.
After all disbursements and Administrative Costs are paid, any remaining
amounts in the Reserve will become part of the Residual described in paragraph 91 below.
Preparation of the Payment File
68.
Within ninety (90) days following the date of the Determination Notices
described above, paragraph 61, the Fund Administrator will compile and send to the Commission
staff the Payee information, including the name, address, calculated Recognized Loss, and the
amount of the Distribution Payment for all Payees (the “Payee List”). The Fund Administrator
will also provide a Reasonable Assurances Letter to the Commission staff, representing that the
Payee List: (a) was compiled in accordance with the approved Plan; (b) is accurate as to Payees’
names, addresses, Recognized Losses and amounts of their Distribution Payment; (c) includes
the number of Payees compensated; (d) the percentage of the Payee’s Recognized Loss being
compensated by the disbursement from the Fair Fund, and if applicable, the total percentage to
include all prior disbursements; (e) the total amount of funds to be disbursed; and (f) provides all
information necessary to make a payment to each Payee.
The Escrow Account
69.
Prior to the disbursement of funds from the Net Available Fair Fund, the Fund
Administrator will establish an escrow account (the “Escrow Account”) with a United States
commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve
Act, Subpart D, 12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the
“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by
Commission staff.
13

70.
The Fund Administrator, pursuant to the Escrow Agreement, shall also establish
with the Bank a separate deposit account (e.g. controlled distribution account, managed
distribution account, linked checking and investment account) (the “Distribution Account”),
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass
through limit. The Distribution Account shall be linked with the Escrow Account and shall be
named, and records maintained, in accordance with the Escrow Agreement.
71. During the term of the Escrow Agreement, the portions of the Fair Fund transferred
to the Escrow Account (the “Escrow Property”), shall be invested and reinvested in short-term
U.S. Treasury securities backed by the full faith and credit of the United States Government or
an agency thereof. The investment shall be, of a type and term necessary to meet the cash
liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax
Administrator and/or Fund Administrator, including investment or reinvestment in a bank
account insured by the FDIC up to the guaranteed FDIC limit, or in money market mutual funds
registered under the Investment Company Act of 1940 that invest 100% of their assets in direct
obligations of the United States Government.
72. The Fund Administrator shall provide duplicate original bank and/or investment
statements on any accounts established by the Fund Administrator to the Tax Administrator on a
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as
necessary.
73. The Fund Administrator shall deposit or invest funds in the Escrow and
Distribution Accounts so as to result in the maximum reasonable net return, taking into account
the safety of such deposits or investments. In consultation with Commission staff, the Fund
Administrator shall work with the Bank on an ongoing basis to determine an allocation of funds
between the Escrow and Distribution Account.
74. All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and
Distribution Accounts will be the responsibility of the Fund Administrator, who may be
reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to
the Bank, its agents, and/or its affiliates from the Escrow Property.
Distribution of the Fair Fund
75.
The Fund Administrator will seek to distribute the Net Available Fair Fund to all
Payees only after all Claim Forms have been processed and all Preliminary Claimants whose
claims have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to contest or cure pursuant to the procedures set forth herein.
76. Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List
and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek
an Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17
C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in
14

accordance with the Payee List for distribution by the Fund Administrator in accordance with the
Plan. All disbursements will be made pursuant to a Commission Order.
77. Upon issuance of an Order to Disburse, the Commission staff will direct the
transfer of funds in accordance with the Payee List to the Bank. The Fund Administrator will
then use its best efforts to commence mailing Distribution Payment checks and/or effect wire
transfers within ten (10) business days of the release of the funds into the Escrow Account. All
efforts will be coordinated to limit the time between the Escrow Account’s receipt of the funds
and the issuance of Distribution Payments.
78.
All Distribution Payments will be issued by the Fund Administrator from the
Distribution Account. All checks will bear a stale date of one hundred eighty (180) days from
the date of issuance. Checks that are not negotiated by the stale date will be voided, and the
Bank will be instructed to stop payment on those checks. A Payee’s claim will be extinguished
if he, she, or it fails to negotiate his, her or its check by the stale date, and the funds will remain
in the Fair Fund, except as provided in paragraph 87.
79.
All payments will be preceded or accompanied by a communication that includes,
as appropriate: (a) a statement characterizing the distribution; (b) a statement that the tax
treatment of the distribution is the responsibility of each Payee and that the Payee should consult
his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
statement that checks will be void and cannot be reissued after one hundred eighty (180) days
from the date the original check was issued; and (d) contact information for the Fund
Administrator for questions regarding the Distribution Payment. The letter or other mailings to
Payees characterizing a Distribution Payment will be submitted to the Tax Administrator and
Commission staff for review and approval.
80.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
81.
Distribution Payments must be made by check or electronic payment payable to
the Payee (the beneficial account owner). A Third-Party Filer shall not be the payee of any
Distribution Payment check or electronic Distribution Payment. Any other payment arrangement
must be discussed with the Fund Administrator in consultation with the Commission staff and
must be authorized by the Payee. Compensation to a Third-Party Filer for its services may not
be paid or deducted from the Distribution Payment.
82.
If, after discussion with the Fund Administrator in consultation with the
Commission staff, and authorization by the Payee(s), a Distribution Payment is to be made to a
Third-Party Filer to distribute to the Payee(s), the Third-Party Filer will be required to complete
a certification, which will require them, at a minimum, to attest that any distribution to the
custodian, trustee, or investment professional representing multiple potentially eligible beneficial
owners, will be allocated for the benefit of current or former pooled investors and not for the
benefit of management. The certification form will be available on the Fair Fund website and
upon request from the Fund Administrator. All such Third-Party Filers must have an auditable
15

mechanism available to the Fund Administrator and the Commission staff to confirm that each
Payee received the Distribution Payment directed to them.
83.
The submission of a Claim Form and the receipt and acceptance of a Distribution
Payment by a Payee is not intended to be a release of a Payee’s rights and claims against any
party.
84.
Electronic or wire transfers may be utilized at the discretion of the Fund
Administrator to transfer approved Distribution Payments to filers of claims on behalf of twenty
(20) or more Payees. Wire transfers will be initiated by the Fund Administrator using a twoparty check and balance system, whereby completion of a wire transfer will require an
authorization by two members of the Fund Administrator’s senior staff.
85.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.
Post Distribution; Handling of Returned or Uncashed Checks; and Reissues
86.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than one hundred eighty (180) days after the initial mailing of the original check) or if the
distribution check is returned again, the check shall be voided and the Fund Administrator shall
instruct the issuing financial institution to stop payment on such check. If the Fund
Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its
discretion, may remove such Payee from the distribution and the allocated Distribution Payment
will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.
87.
The Fund Administrator will reissue checks to Payees upon the receipt of a valid,
written request from the Payee prior to the initial stale date. In cases where a Payee is unable to
endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or
recipient is deceased) and the Payee or a lawful representative requests the reissuance of a
Distribution Payment check in a different name, the Fund Administrator will request, and must
receive, documentation to support the requested change. The Fund Administrator will review the
documentation to determine the authenticity and propriety of the change request. If, in the
discretion of the Fund Administrator, such change request is properly documented, the Fund
Administrator will issue an appropriately redrawn Distribution Payment to the requesting party.
Reissued checks will be void at the later of one hundred eighty (180) days from issuance of the
original check or ninety (90) days from the reissuance, and in no event will a check be reissued
after one hundred eighty (180) days from the date of the original issuance without the approval
of Commission staff.
88.
The Fund Administrator will make reasonable efforts to contact Payees who have
16

failed to negotiate their Distribution Payment check and take appropriate action to follow up on
the status of uncashed checks at the request of Commission staff. The Fund Administrator may
reissue such checks subject to the time limits detailed herein.
Administrative Costs
89.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Disposition of Undistributed Funds
90.
If funds remain following the initial distribution and payment of all
Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may
seek subsequent distribution of any available remaining funds, pursuant to the Commission’s
Rules.
91.
A residual within the Fair Fund will be established for any amounts remaining
after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may
include funds from, among other things, amounts remaining the Reserve, distribution checks that
have not been cashed, checks or electronic payments that were not delivered or returned to the
Commission, tax refunds for overpayment or for waiver of IRS penalties.
92.
All funds remaining in the Residual that are infeasible to distribute to investors
will be returned to the Commission and transferred to the U.S. Treasury after the final
accounting is approved by the Commission. Returning such money to Respondents would be
inconsistent with the equitable principle that no Person should profit from their own wrongdoing.
Therefore, in these circumstances, distributing disgorged funds to the U.S. Treasury is the most
equitable alternative.
Filing of Reports and Accountings
93.
In accordance with Rule 1105(f) of the Commission’s Rules, the Fund
Administrator shall provide to the Commission staff a progress report and a quarterly account
statement in a format to be provided by Commission staff, within forty-five (45) days of the
Commission’s approval of the Plan, and shall provide to Commission staff additional reports and
quarterly account statements within ten (10) days after the end of every calendar quarter. Such
progress reports shall inform the Commission staff of the activities and status of the Fair Fund
during the reporting period, and shall specify, at a minimum, the location of the account(s)
comprising the Fair Fund, including among other things, an interim accounting of all monies in
the Fair Fund.
94.
When the final distribution is completed, the Fund Administrator shall provide to
Commission staff a final report summarizing all tasks undertaken and the outcome of its
administrative efforts. The Fund Administrator shall make arrangement for the final payment of
all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and
distributed in connection with the administration of the Plan in a format provided by the
17

Commission staff. The Fund Administrator will also submit a report to the Commission staff
containing the final distribution statistics regarding distributions to individuals and entities, and
such other information requested by the Commission staff.
Termination of the Fair Fund
95.
The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred (a) a final accounting, in a standard
accounting format provided by the Commission staff, has been submitted by the Fund
Administrator and approved by the Commission; (b) all Administrative Costs have been paid;
and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer
to U.S. Treasury. Once the Commission has approved the final accounting, the Commission
staff will seek an order from the Commission authorizing: (a) the transfer of any amounts
remaining in the Fair Fund that is infeasible to return to investors, and any amounts returned to
the Fair Fund in the future that are infeasible to return to investors, to the U.S. Treasury, subject
to Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c)
cancellation of the Fund Administrator’s bond; and (d) termination of the Fair Fund.
96.
Once the Fair Fund has been terminated and funds, if any, are transferred to the
U.S. Treasury, no further claims will be allowed and no additional payments will be made
whatsoever.
Miscellaneous
97.
When administering this Plan, the Fund Administrator, and/or each of its
designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,
including orders issued by delegated authority; orders issued by an administrative law judge, if
any, appointed in this proceeding; and any records, including records containing investor
information, provided by Commission staff.
98.
Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will
be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the
Commission’s Rules.
Wind-down and Document Retention
99.
The Fund Administrator will shut down the website, P.O. Box and customer
service telephone line(s) established specifically for the administration of the Fair Fund six (6)
months after the transfer of any remaining funds to the Commission, or at such earlier time as the
Fund Administrator determines with the concurrence of the Commission staff.
100. The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six (6) years from the date of
approval of a final fund accounting. Materials maintained in electronic form must be accessible
and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund
18

Administrator will either turn over to the Commission or destroy all materials, including
documents in any media, upon expiration of this period.
VII.

NOTICE AND COMMENT PERIOD

101. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the
“Notice”) will be published on the Commission’s website at
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments to the Commission within thirty (30) days of
the publication of the Notice: (a) to the Office of the Secretary, United States Securities and
Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by using the
Commission’s Internet comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending
an email to rule-comments@sec.gov. Comments submitted by email or via the Commission’s
website should include “Administrative Proceeding File Number 3-20523” in the subject line.
Comments received will be available to the public. Persons should only submit comments that
they wish to make publicly available.

19

Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation is designed to compensate investors based on their losses on shares
of KHC common stock (the “Security”) purchased or acquired between February 26, 2016 and
February 21, 2019, inclusive, (the “Relevant Period”) due to the misconduct of the Respondents
relating to a multi-year earnings mismanagement scheme. Investors who did not purchase or acquire
shares of the Security during the Relevant Period or who are an Excluded Party1 are ineligible to
recover under this Plan. Artificial inflation in the price of the Security over various date ranges
surrounding corrective disclosures and average closing prices of the Security have been calculated
by the Commission’s economists and are reflected in Table A and Table B, respectively.
The Fund Administrator will calculate the amount of loss for each share of the Security
purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as follows:
For each share of the Security purchased or acquired between February 26, 2016 and
February 21, 2019, inclusive, and
A.

Sold prior to the opening of trading on February 22, 2019, the Recognized Loss per
Share is $0.00.

B.

Sold after the opening of trading on February 22, 2019 and prior to the close of
trading on May 22, 2019 (the “Lookback Period”) the Recognized Loss per Share is
the least of:

C.

1.

the amount of inflation per share on the purchase/acquisition date as set forth
in Table A below; or

2.

the purchase/acquisition price minus the sale price; or

3.

the purchase/acquisition price minus the moving average closing price of the
Security on the sale date as set forth in Table B below.

Held as of the close of trading on May 22, 2019, the last day of the Lookback Period,
Recognized Loss per Share is the lesser of:
1.

the amount of inflation per share on the purchase/acquisition date as set forth
in Table A below; or

2.

the purchase/acquisition price minus $32.65, the average closing price of the
Security during the Lookback Period, as shown in the last row in Table B
below.

If the Recognized Loss per Share calculates to a negative number, reflecting a gain, the
Recognized Loss per Share on such shares will be $0.00.
1

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.

All prices mentioned in the calculations exclude all taxes, fees and commissions. Purchases,
acquisitions, and sales shall be deemed to have occurred on the “contract” or “trade” date as opposed
to the “settlement” or “payment” date.
A Preliminary Claimant’s Recognized Loss will be the sum of the Recognized Loss per
Share, as calculated above, on all shares of the Security purchased or acquired during the Relevant
Period. If the Recognized Loss calculates to a gain, then the Recognized Loss will be $0.00.
A Preliminary Claimant who is determined to have suffered a Recognized Loss in
accordance with the calculation above and who is not an Excluded Party will be deemed an Eligible
Claimant.
Additional Provisions
FIFO Methodology: Transactions for an Eligible Claimant who made multiple
purchases/acquisitions and sales of the Security during the Relevant Period will be matched
according to the first-in, first-out (“FIFO”) method. The earliest sales during the Relevant Period
will be matched first against any holdings at the opening of the Relevant Period. Once the beginning
holdings all have been matched, or in the event there are no beginning holdings, then any further
sales will be matched against the earliest Relevant Period purchases/acquisitions, and
chronologically thereafter.
Acquisitions: The receipt or grant of the Security to the Eligible Claimant by gift, devise,
inheritance, or operation of law during the Relevant Period is not considered an eligible purchase if
the original purchase did not occur during the Relevant Period. Shares acquired outside the Relevant
Period will be excluded from the calculation of the Recognized Loss.
Options and Derivatives: KHC common stock is the only security eligible for recovery under
this Plan. Option contracts to purchase or sell the Security are not eligible for recovery under the
Plan. With respect to the Security purchased or sold through the exercise of an option, the
purchase/sale date is the exercise date of the call and the assignment date of the put, and the
purchase/sale price is the strike price of the call at the time of exercise and the strike price of the put
at the time of assignment. Transactions in the Security during the Relevant Period that are pursuant
to, or in connection with, a swap or another derivative will not be eligible for a recovery and will be
excluded from the Recognized Loss calculation.
Short Sales: If the sale date for a share falls before the purchase date, then the share has a
Recognized Loss per Share of $0.00. The date of covering a short sale is deemed to be the date of
purchase of the Security and the date of a short sale is deemed to be the date of sale of the Security.
The earliest Relevant Period purchases will be matched against any short position existing on the
date prior to the start of the Relevant Period, and not be entitled to a recovery, until that short
position is fully covered.
Recognized Loss: Recognized Loss will be the sum of the Recognized Loss per Share, as
calculated above, on all shares of the Security purchased or acquired during the Relevant Period. If
the Recognized Loss calculates to a negative number, reflecting a gain, then the Recognized Loss
2

will be $0.00.
Eligible Claimant: A Preliminary Claimant, who is not an Excluded Party, who submitted a
valid Claim Form and has suffered a Recognized Loss, as calculated above, will be deemed an
Eligible Claimant.
Market Loss Limitation: If an Eligible Claimant’s actual market loss on shares of the
Security purchased/acquired during the Relevant Period is less than his, her or its Recognized Loss,
then the Eligible Claimant’s Recognized Loss shall be limited to the actual market loss amount. If
the actual market loss calculates to a gain, then the Eligible Claimant’s Recognized Loss will be
$0.00. The actual market loss will be calculated as (a) the total purchase amount for shares of the
Security purchased/acquired during the Relevant Period,2 less (b) the sales proceeds from shares of
the Security purchased/acquired during the Relevant Period and sold during the Relevant Period or
during the Lookback Period,3 and (c) the holding value on the remaining of those shares, which for
purposes of this calculation will be $32.65 per share, the moving average price as of the last day of
the Lookback Period.4
Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of
Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will equal
his, her or its Recognized Loss, plus “Reasonable Interest” if applicable. If the Net Available Fair
Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each Eligible
Claimant’s distribution amount will equal his, her or its “Pro Rata Share” of the Net Available Fair
Fund (and no Reasonable Interest). In either case, the distribution amount will be subject to the
“Minimum Distribution Amount.”
Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all Eligible
Claimants their Recognized Losses in full, the Fund Administrator, in consultation with the Commission
staff, may include interest in the distribution amount to compensate for the time value of money on
Recognized Losses. Reasonable Interest will be calculated using the Short-term Applicable Federal Rate
plus three percent (3%), compounded quarterly from the end of the Relevant Period through the
approximate date of the disbursement of the funds. If there are insufficient funds to pay Reasonable
Interest in full to all Eligible Claimants, Reasonable Interest will be awarded on a pro rata basis from the
excess funds.
Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’
Recognized Losses against one another. An Eligible Claimant’s Pro Rata Share will be calculated as the
ratio of his, her, or its Recognized Loss to the sum of Recognized Losses of all Eligible Claimants.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. An
Eligible Claimant whose distribution amount is less than the Minimum Distribution Amount will be
2

Purchases during the Relevant Period to cover short positions will be included in the calculation of actual market loss if
the purchase is matched to a short sale during the Relevant Period. Purchases/acquisitions that are not eligible for
recovery will not be considered for purposes of calculating the actual market loss.
3
Sales of the Security during the Relevant Period will be matched first against the opening position and the proceeds of
such sales will not be considered for purposes of calculating the actual market loss. Short sales will be considered for
purposes of calculating the actual market loss.
4
Any open short positions at the end of the Lookback Period will be ignored for purposes of calculating the actual
market loss.

3

deemed ineligible to receive a Distribution Payment and his, her, or its distribution amount will be
reallocated on a pro rata basis to Eligible Claimants whose distribution amounts are greater than or
equal to the Minimum Distribution Amount.
Payee: An Eligible Claimant whose distribution amount (inclusive of Reasonable Interest, if
any) equals or exceeds the Minimum Distribution Amount will be deemed a Payee and will receive a
Distribution Payment for their distribution amount.
Prior Recovery: To avoid payment of a windfall, the Distribution Payment will be no larger
than the Payee’s Recognized Loss minus the amount of any compensation for the loss that resulted
from the conduct described in the Order that was received from another source (e.g., class action
settlement), to the extent known by the Fund Administrator. Reasonable Interest, if awarded, may
be added to such Distribution Payment.

4

Table A: KHC Common Stock Inflation Schedule
Date Range
February 26, 2016 — February 21, 2019
On or after February 22, 2019

Inflation per Share
$9.78
$0.00

Table B: KHC Common Stock Moving Average Closing Price, February 22, 2019 – May 22, 2019
Moving
Moving
Moving
Average
Average
Average
Closing Price
Closing Price
Closing Price
from
from
from
February 22,
February 22,
February 22,
2019 to Date
2019 to Date
2019 to Date
Shown
Date
Shown
Date
Shown
2/22/2019
$34.95
3/25/2019
$32.61
4/24/2019
$32.72
2/25/2019
$34.59
3/26/2019
$32.62
4/25/2019
$32.72
2/26/2019
$34.10
3/27/2019
$32.62
4/26/2019
$32.73
2/27/2019
$33.63
3/28/2019
$32.63
4/29/2019
$32.74
2/28/2019
$33.54
3/29/2019
$32.63
4/30/2019
$32.75
3/1/2019
$33.35
4/1/2019
$32.63
5/1/2019
$32.75
3/4/2019
$33.33
4/2/2019
$32.61
5/2/2019
$32.74
3/5/2019
$33.30
4/3/2019
$32.60
5/3/2019
$32.74
3/6/2019
$33.25
4/4/2019
$32.60
5/6/2019
$32.74
3/7/2019
$33.11
4/5/2019
$32.62
5/7/2019
$32.73
3/8/2019
$33.02
4/8/2019
$32.63
5/8/2019
$32.73
3/11/2019
$32.95
4/9/2019
$32.64
5/9/2019
$32.73
3/12/2019
$32.87
4/10/2019
$32.65
5/10/2019
$32.72
3/13/2019
$32.83
4/11/2019
$32.66
5/13/2019
$32.71
3/14/2019
$32.77
4/12/2019
$32.68
5/14/2019
$32.70
3/15/2019
$32.73
4/15/2019
$32.69
5/15/2019
$32.70
3/18/2019
$32.69
4/16/2019
$32.70
5/16/2019
$32.69
3/19/2019
$32.66
4/17/2019
$32.70
5/17/2019
$32.69
3/20/2019
$32.62
4/18/2019
$32.71
5/20/2019
$32.68
3/21/2019
$32.63
4/22/2019
$32.71
5/21/2019
$32.67
3/22/2019
$32.61
4/23/2019
$32.72
5/22/2019
$32.65

5

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3Ace7af69498723101. Public record. Not legal advice.