Prominent startup Hampton Creek that is attempting to bring the panache of the tech industry to ranch dressing, mayonnaise and other products is under scrutiny as regulators look into its business practices.
A preliminary inquiry was opened by the Securities and Exchange Commission into startup Hampton Creek, says one person who was briefed on this situation, but asked that his name not be used publicly.
The inquiry by the SEC came following a report that was recently released that described an organized Hampton Creek effort to buy large numbers of its Just Mayo, which is a mayonnaise that uses an ingredient that is plant-based rather than eggs, by sending contractors in disguise into stores.
An SEC spokesperson would not comment on the report when one was requested. Hampton Creek’s CEO Joshua Tetrick has said he had heard from members of the SEC about the inquiry that he called informal, but declined to release any additional detail.
A report said that the product’s buyback effort that took place during 2014, made it seem like Just Mayo was more popular that it really had been, not long prior to Hampton Creek raising over $90 million from different venture capitalists and other investors.
The details of this program were confirmed through a former employee of Hampton Creek, who requested anonymity due to confidential restrictions the former worker had with a onetime employer.
Following the report, Tetrick posted a blog that said the mayonnaise shopping spree was just part of the company’s quality control program, which had little or no impact on its overall sales.
The SEC inquiry puts a big cloud over the heads of everyone at Hampton Creek, which described itself as a food company that was the fastest growing in the world.
The company promised it would tackle the current food industry through its use of technology, using some of the big data tools to help them.
One of the goals of the company was to identify healthy, ingredients that are plant-based that are able to be substituted for other foods that are common such as eggs with less of an impact negatively on the current government.
Bill Gates has praised Hampton Creek, while it received financial backing from entrepreneurs in Silicon Valley and investors such as Vinod Khosla, Marc Benioff and succeeded in having many products already in the retailers such as Whole Foods, Costco and Walmart.
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