(Reuters) – U.S. regulators have opened a probe regarding Marlboro maker Altria Group Inc’s (MO.N) investment in e-cigarette maker Juul Labs Inc, according to a person familiar with the matter.
The U.S. Securities and Exchange Commission is investigating whether the Marlboro maker adequately disclosed the risks to its shareholders when it spent $12.8 billion in 2018 for a 35% stake in the start-up, the Wall Street Journal reported earlier on Friday.
The SEC has issued subpoenas to Juul and the e-cigarette maker has responded, according to the person familiar with the matter.
Juul has turned over documents including correspondence with Altria and financial projections Juul shared with Altria before the deal, the person said.
Altria has recorded $8.6 billion in impairment charges since investing in Juul in December 2018, bringing the value of its investment to $4.2 billion by end of 2019.
Juul and Altria did not immediately respond to a request from Reuters for comment.
Reporting by Praveen Paramasivam and Abhishek Manikandan in Bengaluru, and Chris Kirkham in Los Angeles; Editing by Shailesh Kuber and Daniel Wallis