Diageo Settles for $5 Million With SEC on Profit-Boosting Charges
February 19 2020 - 11:31AM
Dow Jones News
By Dave Sebastian
Diageo PLC has agreed to pay $5 million to settle charges
brought by the Securities and Exchange Commission that it hit
performance goals by pressuring distributors to buy products in
excess of demand.
The pressure on distributors by the company's employees at
Diageo North America, its largest subsidiary, contributed to an
uptick in shipments that allowed it to meet performance targets and
post higher growth in closely watched indicators amid declining
market conditions, the SEC alleges. The London-based
alcoholic-beverage company didn't disclose the risk of the
inventory increase on future growth, the SEC said.
In addition to the settlement, Diageo agreed to cease and desist
from further violations without admitting or denying the SEC's
findings.
"Diageo is pleased to have resolved this legacy matter, which
relates back to fiscal years 2014 and 2015," the company said.
"Diageo regularly reviews and refines its policies and procedures
and is committed to maintaining a robust and transparent disclosure
process."
The SEC also said the metric-boosting method created a
misleading impression that the company was able to achieve growth
through regular demand.
"Investors rely on public companies to make complete and
accurate disclosures upon which they can base their investment
decisions," Melissa Hodgman, an associate director in the SEC's
Division of Enforcement, said in prepared remarks.
American depositary shares of Diageo rose about 0.7% to
$162.94.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
February 19, 2020 11:16 ET (16:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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