UPS Settles With SEC Over Freight Business Valuation

UPS has settled with the U.S. Securities and Exchange Commission (SEC) for $45 million due to accusations of incorrect valuation of its freight business in financial reporting for 2019 and 2020. The SEC claimed that UPS did not adhere to generally accepted accounting principles when assessing its less-than-truckload (LTL) operations. Specifically, UPS allegedly used an external consultant for valuation without disclosing pertinent internal analysis, which led to a misrepresentation of the freight unit’s financial results. The SEC indicated that if UPS had accurately valued its freight business, reported earnings would have been significantly lower. Although UPS did not admit to the allegations, it has agreed to prevent future violations. UPS sold its freight operations to TFI International for $800 million in 2021. In the transportation sector, proper financial reporting and transparency are crucial for maintaining investor confidence and market integrity. Misvaluation can have ripple effects, impacting stock prices, investor relations, and even regulatory scrutiny. Accurate valuations reflect the true operational health of a company. With UPS being the largest for-hire carrier, this case serves as a reminder of the importance of rigorous accounting practices in fostering trust and stability in logistics and transportation markets.